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Airline Stock Roundup: AAL's 737 MAX Grounding Update, HA's Traffic Report & More

Maharathi Basu

In the last week, American Airlines AAL extended the grounding period of Boeing 737 Max jets till Sep 3, 2019, from the previous announcement of Aug 19. Currently, the carrier has 24 such jets in its fleet.

On the traffic front, Hawaiian Airlines — the wholly-owned subsidiary of Hawaiian Holdings HA — LATAM Airlines LTM and SkyWest SKYW unveiled their respective traffic numbers for May. Load factor (% of seats filled by passengers) increased at all three carriers as traffic growth outpaced capacity expansion. Meanwhile, an expansion-related update was available from JetBlue Airways JBLU in the last week.

(Read the last Airline Stock Roundup here)

Recap of the Past Week’s Most Important Stories

1. Updates on Boeing 737 MAX jets have been flooding the aviation space ever since the deadly Ethiopian Airlines’ crash on Mar 10, 2019. In fact, this was the second accident involving Boeing 737 MAX jets within a span of five months as the same model went down in Indonesia last October, killing 189 people. The latest update came from American Airlines that suspended operations of its Boeing 737 Max jets until early September, extending the grounding period by a fortnight. The carrier said that it will cancel 115 flights daily. Previously, American Airlines expected its current-year pre-tax earnings to be affected to the tune of roughly $350 million. However, the loss might increase with the recent extension in Boeing 737 MAX jet’s grounding time period. (Read more: American Airlines Extends 737 MAX Grounding Period Once More)

2. Traffic at Hawaiian Airlines (measured in Revenue Passenger Miles or RPMs) increased 5.8% to around 1.53 billion in May. Available Seat Miles (ASMs) climbed 4.1% to 1.75 billion in the month. In the first five months of the year, Hawaiian Airlines witnessed a 3.4% rise in RPMs to 7.09 billion. Also, ASMs rose 3.2% to 8.3 billion. As a result, load factor increased 20 bps to 85.5%. (Read more: Hawaiian Airlines Posts Rise in May Traffic & Load Factor)

3. SkyWest reported an 8.3% year-over-year increase in block hours (a measure of aircraft utilization) to 124,404 in May. The carrier stated that the upside was owing to the addition of E175, CRJ700 and CRJ900 aircraft to its fleet since last May. SkyWest’s dual class aircraft (E175, CRJ900 and CRJ700) accounted for approximately 65.3% of the carrier’s total block-hour production compared with approximately 59.5% a year ago. Additionally, load factor improved to 83.9% in the same month from 82.9% a year ago. (Read more: SkyWest's Block Hours & Load Factor Increase in May)

SkyWest carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

4. At LATAM Airlines, consolidated traffic increased 6.4% to 9.87 billion driven by solid travel demand. Additionally, consolidated capacity (or available seat miles/ASMs) expanded 3% to 11.8 billion. Consolidated load factor increased 270 basis points (bps) to 83.6%. Additionally, passenger count climbed 8.6% in the month to 5.74 million.

5. JetBlue will launch an additional flight to Guayaquil, Ecuador, beginning Dec 5, 2019. Once operational, this non-stop daily flight from New York’s John F. Kennedy International Airport will be the longest route in JetBlue’s network.

The new service will expand JetBlue’s base in Ecuador and South America. The carrier will operate on the route via the fuel-efficient Airbus A321neo aircraft, featuring premium facilities such as luxurious seating and infight entertainment services for an enhanced customer experience. (Read more: JetBlue to Begin New York-Guayaquil Flight This December)

Performance

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

The table above shows that all airline stocks exhibited a mixed trend with respect to price over the past week. The NYSE ARCA Airline Index gained 1.2% in the period, with oil prices moving southward. Over the course of six months, the sector tracker has depreciated 0.7%.

What's Next in the Airline Space?

Stay tuned for May traffic updates from the likes of Copa Holdings CPA in the coming days.

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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
 
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report
 
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