In the past week, the aviation space put up a dismal show for the ongoing third-quarter earnings season, thereby confirming the cloud of pessimism surrounding the airline stocks as the coronavirus continues to wreak havoc.
Well-known names in the space like American Airlines AAL, Southwest Airlines LUV, Alaska Air Group ALK, Hawaiian Holdings HA and JetBlue Airways JBLU incurred losses in the third quarter of 2020. This underperformance was due to shrinking passenger revenues as air-travel demand remains subdued due to the pandemic.
The carriers joined the club of United Airlines UAL in reporting a loss for the September quarter. Notably, United Airlines’ results were mentioned in the previous week’s write-up.
Synopsis of the Past Week’s Top Stories
1. American Airlines incurred a loss (excluding 83 cents from non-recurring items) of $5.54 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $5.62.
However, operating revenues of $3,173 million slumped 73.4% year over year but surpassed the Zacks Consensus Estimate of $2,800.8 million. Passenger revenues plunged 76.9% to $2,540 million.
2. Alaska Air Group suffered a loss of $3.23 per share (excluding 26 cents from non-recurring items) in the third quarter of 2020, wider than the Zacks Consensus Estimate of a loss of $2.86. However, in the year-ago quarter, the company delivered earnings of $2.63 when air-travel demand was strong. Revenues at Alaska Air came in at $701 million, surpassing the Zacks Consensus Estimate of $680.3 million. The top line, however, declined 70.7% year over year. Passenger revenues were down 74% on a year-over-year basis due to weak travel demand.
3. Southwest Airlines, currently carrying a Zacks Rank #3 (Hold), reported a loss of $1.99 per share (excluding 3 cents from non-recurring items) for the third quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.44. However, in the year-ago period, the company reported earnings of $1.23 per share. September-quarter results were affected by a sharp drop in passenger revenues as a result of persistent softness in air-travel demand.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
4.JetBlue Airways posted a third-quarter 2020 loss (excluding 31 cents from non-recurring items) of $1.75 per share, comparing favorably with the Zacks Consensus Estimate of a loss of $1.91. Results were hurt by the coronavirus-induced bleak air-travel demand.
5. Hawaiian Holdings’ third-quarter 2020 loss (excluding $1.65 from non-recurring items) of $3.76 per share was wider than the Zacks Consensus Estimate of a loss of $3.56. The carrier, however, delivered earnings of $1.72 in third-quarter 2019. Meanwhile, quarterly revenues of $76 million missed the Zacks Consensus Estimate of $106.8 million and also plummeted 89.9% year over year due to the 94.3% fall in passenger revenues. Airline traffic, measured in revenue passenger miles, dropped 96.1% in the quarter under review. Capacity (measured in available seat miles (ASMs) also contracted 86.6%. Load factor (percentage of seats filled by passengers) for scheduled operations declined to 25.6% from 87.8% a year ago as the decline in traffic was more than the capacity reduction. Passenger revenue per available seat miles (a measure of unit revenue) tanked 57.2% to 5.59 cents in the September quarter. Economic fuel cost per gallon was down 39.2% to $1.24.
The company expects its December-quarter capacity to decrease 70% year over year. As of Sep 30, 2020, the carrier received $240.6 million worth of grants and $60.3 million as loans, pursuant to the CARES Act financial assistance. Of the total amount, $38 million was received in the September quarter.
The following table shows the price movement of major airline players over the past week and during the past six months.
The table above shows that all the airline stocks have traded in the red over the past week, inducing the NYSE ARCA Airline Index to depreciate 13.7% to $54.98 due to uninspiring earnings reports. However, over the course of the past six months, the NYSE ARCA Airline Index has appreciated 17.6%.
What’s Next in the Airline Space?
Investors will look forward to the third-quarter 2020 earnings report of Gol Linhas GOL, scheduled for Nov 4, 2020
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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
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