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Airline Stock Roundup: DAL & LUV Post Losses in Q1, CPA in Focus

Maharathi Basu
·4 min read

In the past week, Delta Air Lines DAL initiated the first-quarter 2020 earnings season for the airline stocks. The carrier incurred a loss as the coronavirus-led weak air-travel demand resulted in an 18.2% fall in passenger revenues.

Similarly, Southwest Airlines LUV suffered its first quarterly loss in almost a decade with passenger revenues dropping 19% in the first quarter. Moreover, Copa Holdings CPA came out with lackluster preliminary first-quarter results. Detailed results are scheduled to be out on May 6.

Further, due to coronavirus-related weakness in passenger revenues, United Airlines UAL reported bleak preliminary results in the previous week.

Highlights of the Past Week’s Top Stories

1. Delta incurred a loss (excluding 33 cents from non-recurring items) of 51 cents for the March quarter, narrower than the Zacks Consensus Estimate of a loss of 72 cents. However, the bottom line came in against the year-ago quarter’s reported earnings of 96 cents per share (on an adjusted basis). With Delta making significant capacity cuts to match the coronavirus-induced sharp decrease in traffic, capacity (measured in available seat miles) contracted 5.7% to 58.88 billion. With the decline in traffic (down 16.6%) outpacing the capacity reduction, load factor (percentage of seats filled by passengers) was down 960 basis points to 73.1%.

2. Southwest Airlines posted a loss of 15 cents per share (excluding 3 cents from non-recurring items) in the first quarter of 2020, narrower than the Zacks Consensus Estimate of 48 cents. In the year-ago period, the company delivered earnings of 70 cents per share. The results reflect the coronavirus-induced plunge in passenger demand. Meanwhile, operating revenues of $4,234 million lagged the Zacks Consensus Estimate of $4,397 million. Additionally, the top line declined 17.8% year over year.

 3. Copa Holdings expects total revenues of $595.5 million for the quarter, indicating a decline of 11.4% from the year-ago reported figure. Also, operating profit is projected at $98.7 million with an operating margin of 16.6%.

4. Ryanair’s RYAAY CEO Michael O'Leary warned of job cuts if flights remain suspended post May due to coronavirus-related travel restrictions. As of now, management assured all its employees of no pay cut for April and May. Per a Reuters report, he said that the carrier may have to lay off 10-20% of its workforce in winter.

5.In a bid to break the chain of coronavirus, JetBlue Airways JBLU announced a new policy for flying. Per the policy, passengers flying with this Zacks Rank #3 (Hold) low-cost carrier will require to wear a mask to cover their nose and mouth throughout their entire journey. American Airlines AAL too aims to provide face masks to its passengers from May 1 onward.

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

Price Performance

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 majority of the airline stocks have traded in the green over the past week. Evidently, the NYSE ARCA Airline Index has improved 20.2% over the past week. Over the course of six months, the sector tracker has decreased 3.4%.

What's Next in the Airline Space?

Investors will await the first-quarter 2020 earnings report of Alaska Air Group ALK on May 5.

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
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