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Airline Stock Roundup: DAL & GOL's Bullish Q2 Unit Revenue View, HA in Focus

Maharathi Basu

In the past week, Delta Air Lines DAL and Gol Linhas Aereas Inteligentes GOL issued upbeat second-quarter 2019 view with respect to unit revenues, highlighting solid demand for air travel. Delta and GOL Linhas are scheduled to report their respective second-quarter 2019 results on Jul 11 and Aug 1. Both the carriers also reported impressive traffic numbers for June.

Other key airline players like Hawaiian Holdings’ HA subsidiary — Hawaiian Airlines — and LATAM Airlines LTM too revealed their respective traffic reports for June. Load factor (% of seats filled by passengers) increased at both the carriers as traffic growth outweighed capacity expansion in the month.

(Read the last Airline Stock Roundup here)

Recap of Past Week’s Most Important Stories

1. At Delta, consolidated traffic for June, measured in revenue passenger miles (RPMs), came in at 22.77 billion, up 6.2% year over year. Consolidated capacity (or available seat miles/ASMs) climbed 4% to 25.19 billion on a year-over-year basis. Also, consolidated load factor improved 190 basis points to 90.4%.

For the second quarter, Delta anticipates earnings per share in the band of $2.25-$2.35 (previous view: $2.05-$2.35), indicating a surge of more than 25% year over year. Total revenues are expected to increase 8-8.5% (adjusted) year over year. Previously, the same was projected to grow 6-8%. Moreover, pre-tax margin is anticipated between 15% and 16% (earlier view: 14-16%). (Read more: Delta Up on Robust June Traffic & Upbeat Q2 Guidance)

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

2. GOL Linhas expects second-quarter passenger unit revenues (PRASK) to rise approximately 24% year over year. Moreover, unit revenue (RASK) is projected to jump nearly 23%. The EBITDA margin is expected between 22% and 24% in the upcoming quarterly release compared with 16.4% achieved in the year-ago period.

Moreover, the company’s consolidated traffic (measured in revenue passenger kilometers [RPK]), climbed 14.4% to 3.22 billion on account of strong demand for air travel. While international RPK surged in excess of 100%, domestic RPK grew 6.5% in June. (Read more: GOL Linhas Stock Skyrockets on Robust June Traffic Report)

3. Traffic at Hawaiian Airlines increased 1.6% to 1.53 billion in June. Available Seat Miles inched up 0.3% to 1.71 billion in the same month. During the first six months of 2019, the carrier recorded a 3.1% rise in RPMs while ASMs increased 2.6%. (Read more: Hawaiian Airlines' Traffic & Load Factor for June Increase)

4.  At LATAM Airlines, consolidated traffic increased 7% to 9.56 billion driven by solid travel demand. Additionally, consolidated capacity expanded 3.5% to 11.52 billion. Consolidated load factor increased 3.4 percentage points to 85.9%. Additionally, passenger count climbed 8.8% in the month to 5.56 million.

5. Load factor at another Latin American carrier, Azul AZUL, increased in June owing to significant growth in traffic. Notably, this key metric improved for the fifth successive month at Azul, supporting strong demand for air travel. On a year-to-date basis, traffic increased 18.4%, while capacity expanded 15.8%. (Read more: Azul's Load Factor in June Rises for the 5th Successive Time)

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 most airline stocks traded in the green in the past week, leading to a 2.4% gain in the NYSE ARCA Airline Index. However, over the course of the last six months, the NYSE ARCA Airline Index declined 3.5% despite double-digit increase in shares of Latin American carriers — GOL Linhas and Copa Holdings CPA.

What's Next in the Airline Space?

Investors keenly await second-quarter 2019 earnings reports of Delta and United Airlines Holdings UAL due on Jul 11 and 16, respectively.

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Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
 
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
 
LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report
 
AZUL SA (AZUL) : Free Stock Analysis Report
 
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