Airline Stock Roundup: DAL's Pilots to Accept Slashed Pay, JBLU's Q4 View Tepid
In the past week, pilots at Delta Air Lines DAL voted in favor of accepting reduced pays in a bid to save their jobs until 2022. Per the Air Line Pilots’ Association, the union that represents Delta’s pilots, the salary-cut plan won 74% pilots’ support.
JetBlue Airways JBLU also grabbed headlines because of its bearish projections for the December quarter due to the current booking trends. The carrier believes that the recovery in demand and its revenue rebound will be “non-linear through the fourth quarter and beyond”. Notably, United Airlines UAL too issued a bleak outlook for the final quarter of 2020 as was reported in the previous week’s write up.
Synopsis of the Past Week’s Top Stories
1. Per a CNBC report, Delta’s pilots agreed to accept pay cuts to avoid furloughs until 2022. The carrier is making consistent efforts to reduce costs as it grapples with coronavirus-induced weak air-travel demand. Per the deal, the carrier can trim pilots’ guaranteed hours by as much 5%. Additionally, more than 1,700 pilots will get a partial pay of 30 hours a month even without having to fly. These pilots would have otherwise been furloughed at the end of the month without a deal.
2. In a SEC filing, JetBlue management stated that it estimates capacity for the fourth quarter to decline 45-50% year over year from its previous expectation of a decrease of approximately 45%. The company plans to keep managing capacity on a rolling basis so that it is in line with demand. Amid volatile booking trends, the carrier predicts revenues to plunge approximately 70% year over year from its earlier expectation of a slump of nearly 65%.
3. Ryanair Holdings’ RYAAY November traffic tanked 82% year over year to 2 million guests as coronavirus keeps air-travel demand suppressed. On a rolling-annual basis, total traffic at Ryanair (including the LaudaMotion unit) plummeted 60% to 61.4 million.
Additionally, per a Reuters report, the Irish carrier, currently carrying a Zacks Rank #3 (Hold), is set to place an order of up to 75 additional Boeing 737 MAX jets. Notably, the jets were recently certified to be safe for flying again by the U.S. Federal Aviation Administration (FAA) after being grounded since March 2019.
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4. Alaska Air Group’s ALK subsidiary Alaska Airlines announced plans to lease 13 new Boeing 737-9 MAX aircraft from Air Lease Corporation AL as part of its fleet modernization efforts. Alaska Airlines will receive deliveries of the 13 737-9 MAX aircraft from fourth-quarter 2021 through 2022.
5 The U.S. Department of Transportation tightened the rule pertaining to passengers travelling with service animals on flights. The ruling states that only dogs will qualify as service animals. In a major change, animals brought by passengers for emotional support will no longer fall under service animals. This strict ruling may have been prompted by airlines alleging that passengers brought a variety of animals to accompany them on flights for emotional help.
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 the stocks have exhibited a mixed price trend over the past week. The NYSE ARCA Airline Index has inched up 3.5% over the past week. Over the course of the past six months, the NYSE ARCA Airline Index has also appreciated almost 83%.
What’s Next in the Airline Space?
Investors will look forward to the November traffic report of Gol Linhas GOL in the coming days.
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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
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
Air Lease Corporation (AL) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
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