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Airline Stock Roundup: AAL, UAL's Dim Q1 Views, AZUL's Dull Traffic Data & More

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Maharathi Basu
·4 min read
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In the past week, management at airline heavyweights, namely United Airlines UAL and American Airlines AAL stated to expect a respective decline of 66% and 62% in their first-quarter 2021 revenues from the first-quarter 2019 levels due to coronavirus-led air-travel demand weakness.

Meanwhile, Brazilian carrier Azul AZUL announced dismal traffic data for March as the country experiences a second wave of coronavirus. Another Brazilian airline Gol Linhas’ GOL March traffic also got a huge blow due to the fresh spike in COVID-19 cases as was mentioned in the previous week’s write-up.

Recap of the Past Week’s Most Important Stories

1. United Airlines’ management anticipates its first-quarter 2021 revenues to decline 66% from first-quarter 2019 to $3.2 billion due to coronavirus-led suppressed air-travel demand. While the forecast lies in the “favorable end” of the previously guided range of a decrease of 65-70%, it falls short of the current Zacks Consensus Estimate. For the first quarter, United Airlines, currently carrying a Zacks Rank #3 (Hold), estimates average daily core cash burn to be approximately $9 million per day.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. American Airlines’ management expects first-quarter 2021 total revenues to decline approximately 62% from the figure reported in the same period of 2019. The carrier’s past outlook had called for a 60-65% plunge from the 2019 levels. Net loss in the same period is estimated to be $1.2-$1.3 billion. Excluding net special credits, the company expects the same to be roughly between $2.7 billion and $2.8 billion. Net loss per share excluding net special credits, is projected in the $4.29-$4.41 band. The Zacks Consensus Estimate for March-quarter earnings is pegged at a loss of $3.82.

Meanwhile, American Airlines’ management estimates capacity, measured in available seat miles, to slump 43.4% in first-quarter 2021 from the first-quarter 2019 level. Previously, the same was predicted to decrease around 45% from first-quarter 2019. Average fuel price (including taxes) per gallon is forecast to be nearly $1.70.

3. At Azul, traffic, measured in revenue passenger kilometers, dropped 13.4% in March from the February levels. In the same time frame, capacity contracted 5% in March, sequentially. Since traffic decline was more than capacity reduction, load factor (% of seats filled by passengers) skidded to 71.7% in March from 78.6% in February.

4. Southwest Airlines’ LUV management reportedly recalled more than 2,700 flight attendants from a voluntary leave program that the Dallas-based airline offered last year due to significantly suppressed travel demand. With air-travel demand improving in the United States as more Americans get vaccinated, the recalls are aimed at supporting the anticipated increase in demand during summers.

5. With air-travel demand rising in the United States, particularly on the leisure front, Allegiant Travel Company’s ALGT March traffic results were better than the February report. Traffic, measured in revenue passenger miles, increased 60.7% month over month in March. Also, load factor inched up to 55.8% in March from 52.8% recorded in February. The picture was rosy on the year-over-year front as well with traffic jumping 21.8% in March for scheduled service.

Performance

The following table shows the price movement of major airline players over the past week and during the last six months.

The table above shows that most airline stocks have traded in the red in the past week, inducing the NYSE ARCA Airline Index to dip 2.5% to $105.93. Over the course of the past six months, the NYSE ARCA Airline Index has surged 80.1%.

What's Next in the Airline Space?

Investors will keenly await the first-quarter 2021 earnings reports of Delta Air Lines DAL and United Airlines, on Apr 15 and Apr 19, respectively.

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report

Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report

Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report

Allegiant Travel Company (ALGT) : Free Stock Analysis Report

AZUL SA (AZUL) : Free Stock Analysis Report

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