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Airline Stock Roundup: AAL, UAL & Others Post Q1 Loss Under Coronavirus Curse
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In the past week, United Airlines (UAL - Free Report) , American Airlines (AAL - Free Report) , Alaska Air Group (ALK - Free Report) and Hawaiian Holdings (HA - Free Report) reported losses in first-quarter 2020 results. This underperformance was due to a massive drop in passenger revenues as air-travel demand remains suppressed in the wake of the coronavirus pandemic. The likes of Delta Air Lines (DAL - Free Report) and Southwest Airlines (LUV - Free Report) also put up a dismal show when they reported their respective first-quarter financial numbers in the previous week.
Notably, Warren Buffett’s Berkshire Hathaway sold its entire stake in the U.S. airline industry due to the coronavirus impact, which brought the entire space to its knees. “The world has changed for the airlines,” said Warren Buffett, who is considered one of the greatest investors of all times, during Berkshire’s virtual shareholders' meeting.
Recap of the Past Week’s Most Important Stories
1. United Airlines, carrying a Zacks Rank #3 (Hold),incurred a loss (excluding $4.29 from non-recurring items) of $2.57 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $3.25. Even though operating revenues of $7,979 million decreased 16.8% year over year, the same marginally beat the Zacks Consensus Estimate of $7,976 million. The year-over-year plunge was due to the 19% drop in passenger revenues, which accounted for bulk (88.5%) of the top line
2. American Airlines posted a loss (excluding $2.61 from non-recurring items) of $2.65 per share in the first quarter, comparing unfavorably with the Zacks Consensus Estimate of a loss of $2.16. The company reported earnings per share of 52 cents in the year-ago quarter. Operating revenues of $8,515 million declined 19.6% year over year and also fell short of the Zacks Consensus Estimate of $9,146.7 million. Passenger revenues decreased 20.5%.
3. Alaska Air Group incurred a loss of 82 cents per share (excluding $1.05 from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $1.27. In the year-ago quarter, the company reported earnings of 17 cents. This downturn is due to the unprecedented drop in air travel demand following the pandemic situation.
4. Gol Linhas Aereas Inteligentes’ first-quarter earnings of 20 cents per share (excluding $3.08 from non-recurring items) increased year over year on cost-saving initiatives.Net operating revenues of $710.9 million missed the Zacks Consensus Estimate of $929.8 million and also declined year over year. Consolidated revenue passenger kilometers (RPK) — measure for revenues generated per kilometer per passenger — were down 6.4% year over year. The metric declined 4.7% and 16% on the domestic and international front, respectively.
5. Hawaiian Holdings’ first-quarter loss (excluding $2.40 from non-recurring items) of $1 per share was wider than the Zacks Consensus Estimate of a loss of 74 cents. The carrier reported earnings of 67 cents in first-quarter 2019. Moreover, quarterly revenues of $559.1 million missed the Zacks Consensus Estimate of $564 million and fell 14.9% year over year as well.
Due to the plummeted travel demand amid the COVID-19 pandemic, passenger revenues representing majority (90%) of the top line decreased 16.3% year over year. Airline traffic, measured in revenue passenger miles, deteriorated 10.1% year over year to 3.71 billion in the quarter under review. Capacity measured in available seat miles (ASMs) inched up 2.6% to 4.97 billion. Load factor (percentage of seats filled by passengers) contracted 105 basis points to 74.6% in the reported quarter as capacity expanded while traffic declined.
Performance
The following table shows the price movement of airline over the past week and during the past six months.
The table above shows that all airline stocks traded in the red in the past week resulting in the NYSE ARCA Airline Index declining 18.8%. Over the course of the past six months, the NYSE ARCA Airline Index gained 28.3%.
What's Next in the Airline Space?
Investors will keenly await first-quarter 2020 earnings reports of SkyWest and JetBlue Airways, scheduled to be released on May 7.
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This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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Airline Stock Roundup: AAL, UAL & Others Post Q1 Loss Under Coronavirus Curse
In the past week, United Airlines (UAL - Free Report) , American Airlines (AAL - Free Report) , Alaska Air Group (ALK - Free Report) and Hawaiian Holdings (HA - Free Report) reported losses in first-quarter 2020 results. This underperformance was due to a massive drop in passenger revenues as air-travel demand remains suppressed in the wake of the coronavirus pandemic. The likes of Delta Air Lines (DAL - Free Report) and Southwest Airlines (LUV - Free Report) also put up a dismal show when they reported their respective first-quarter financial numbers in the previous week.
Notably, Warren Buffett’s Berkshire Hathaway sold its entire stake in the U.S. airline industry due to the coronavirus impact, which brought the entire space to its knees. “The world has changed for the airlines,” said Warren Buffett, who is considered one of the greatest investors of all times, during Berkshire’s virtual shareholders' meeting.
Recap of the Past Week’s Most Important Stories
1. United Airlines, carrying a Zacks Rank #3 (Hold),incurred a loss (excluding $4.29 from non-recurring items) of $2.57 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $3.25. Even though operating revenues of $7,979 million decreased 16.8% year over year, the same marginally beat the Zacks Consensus Estimate of $7,976 million. The year-over-year plunge was due to the 19% drop in passenger revenues, which accounted for bulk (88.5%) of the top line
You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.
2. American Airlines posted a loss (excluding $2.61 from non-recurring items) of $2.65 per share in the first quarter, comparing unfavorably with the Zacks Consensus Estimate of a loss of $2.16. The company reported earnings per share of 52 cents in the year-ago quarter. Operating revenues of $8,515 million declined 19.6% year over year and also fell short of the Zacks Consensus Estimate of $9,146.7 million. Passenger revenues decreased 20.5%.
3. Alaska Air Group incurred a loss of 82 cents per share (excluding $1.05 from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $1.27. In the year-ago quarter, the company reported earnings of 17 cents. This downturn is due to the unprecedented drop in air travel demand following the pandemic situation.
4. Gol Linhas Aereas Inteligentes’ first-quarter earnings of 20 cents per share (excluding $3.08 from non-recurring items) increased year over year on cost-saving initiatives.Net operating revenues of $710.9 million missed the Zacks Consensus Estimate of $929.8 million and also declined year over year. Consolidated revenue passenger kilometers (RPK) — measure for revenues generated per kilometer per passenger — were down 6.4% year over year. The metric declined 4.7% and 16% on the domestic and international front, respectively.
5. Hawaiian Holdings’ first-quarter loss (excluding $2.40 from non-recurring items) of $1 per share was wider than the Zacks Consensus Estimate of a loss of 74 cents. The carrier reported earnings of 67 cents in first-quarter 2019. Moreover, quarterly revenues of $559.1 million missed the Zacks Consensus Estimate of $564 million and fell 14.9% year over year as well.
Due to the plummeted travel demand amid the COVID-19 pandemic, passenger revenues representing majority (90%) of the top line decreased 16.3% year over year. Airline traffic, measured in revenue passenger miles, deteriorated 10.1% year over year to 3.71 billion in the quarter under review. Capacity measured in available seat miles (ASMs) inched up 2.6% to 4.97 billion. Load factor (percentage of seats filled by passengers) contracted 105 basis points to 74.6% in the reported quarter as capacity expanded while traffic declined.
Performance
The following table shows the price movement of airline over the past week and during the past six months.
The table above shows that all airline stocks traded in the red in the past week resulting in the NYSE ARCA Airline Index declining 18.8%. Over the course of the past six months, the NYSE ARCA Airline Index gained 28.3%.
What's Next in the Airline Space?
Investors will keenly await first-quarter 2020 earnings reports of SkyWest and JetBlue Airways, scheduled to be released on May 7.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
See their latest picks free >>