Airline Stock Roundup: HA's Long-Serving CEO to Retire, CPA, ALGT in Focus
This week Hawaiian Airlines — the wholly owned subsidiary of Hawaiian Holdings HA — announced the appointment of Peter Ingram as its president and chief executive officer. Notably, Ingram will replace Mark Dunkerley from Mar 1, 2018, as a result of the latter’s retirement.
Additionally, Allegiant Air, which is owned by Allegiant Travel Company ALGT, grabbed headlines by virtue of its pay-related tentative five-year deal with the union representing its flight attendants. During the week, Copa Holdings CPA and Alaska Air Group ALK unveiled their respective traffic numbers for October. While load factor (percentage of seats filled by passengers) increased at Copa Holdings, the metric declined at Alaska Air Group as capacity expansion was surpassed by traffic growth at the Seattle, WA based carrier.
Furthermore, expansion-related updates from United Continental Holdings UAL and Alaska Air Group’s subsidiary, Alaska Airlines, also grabbed headlines in the past five trading days.
Transportation - Airline Industry 5YR % Return
Transportation - Airline Industry 5YR % Return
(Read the last Airline Stock Roundup for Nov 15, 2017).
Recap of the Past Week’s Most Important Stories
1. Hawaiian Airlines announced that its CEO Mark Dunkerley will retire in March 2018. Dunkerley will be succeeded by Peter Ingram, currently the airline’s chief commercial officer. Having joined the company in 2002, Dunkerley served the post since 2005 for both Hawaiian Airlines as well as its parent company. His tenure has been one of the longest in the airline industry. (Read more: Hawaiian Holdings Arm to Bid CEO Dunkerley Adieu Next March)
2. Copa Holdings reported a substantial rise in traffic for October. Traffic — measured in revenue passenger miles (RPMs) — came in at 1.71 billion, up 13.5% on a year-over-year basis.
Consolidated capacity (or available seat miles/ASMs) expanded 11.5% to 2 billion. Load factor expanded 150 basis points (bps) to 84.8% as traffic growth outweighed capacity expansion of this Zacks Rank #3 (Hold) company. (Read more: Copa Holdings' October Traffic and Load Factor Rise)
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3. At Alaska Air Group, RPMs came in 4.37 billion, up 11%. ASMs rose 11.6% to 5.21 billion. Load factor contracted 40 bps to 83.8% as capacity expansion outpaced traffic growth. (Read more: Alaska Air Group Traffic Rises in October, Load Factor Dips)
On a separate note, Alaska Airlines announced its decision to start operating flights on a daily basis connecting Seattle and Pittsburgh from Sep 6, 2018. These nonstop flights will be the first such service connecting two popular destinations. (Read more: Alaska Air Group Arm to Initiate Seattle-Pittsburgh Flights)
4. Allegiant Air announced that it has reached a tentative agreement with Transport Workers Union (TWU), which represents its 1,150 flight attendants after many years of negotiation. Tentative agreements, however, do not necessarily mean that the deal will be operational. They will be effective only on ratification. In fact, Allegiant and TWU had reached a tentative deal last year as well. However, it was voted down by the flight attendants. Allegiant will be hoping that results of the ratification vote are favorable this time. Results of the ratification vote are anticipated to be out by year end. The deal, if ratified, will result in significant pay raises for the flight attendants.
5. In a bid to expand its domestic network, United Continental announced its decision to add flights from five of its hubs in the United States to 10 cities in California, Florida, Montana, New York, North Carolina, Oregon and Texas. The daily year-round flights, expected to be launched in April 2018, will meet the surge in demand for air travel next spring. The company also intends to start operating daily seasonal flights from the O'Hare International Airport (ORD) and Los Angeles (LAX) from June 2018, as part of its expansion drive. The carrier also aims to enhance operations at ORD from February 2018.
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 traded in the green over the past week leading to the NYSE ARCA Airline Index’s 6.3% gain to $110.99 over the past five trading days. Shares of Copa Holdings gained the most, on the back of impressive traffic results. Over the course of six months, the sector tracker depreciated 0.9, despite impressive gains at Latin American carriers — GOL Linhas GOL and Copa Holdings. In fact, Spirit Airlines SAVE emerged as the biggest laggard (30.5%) during the period.
What's Next in the Airline Space?
With the earnings season over, stay tuned for the usual news updates in the space. Moreover, it is likely to be a busy week for carriers ahead with the Thanksgiving week in progress. Stay tuned for further updates on the issue.
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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
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