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Airline Stock Roundup: GOL Linhas Launches Business Unit, DAL, RYAAY in Focus

Maharathi Basu

In the past week, Latin American carrier — Gol Linhas Aereas Inteligentes GOL — introduced a new business segment — GOL Aerotech —in Brazil. The division provides aircraft maintenance, repairs, and aircraft and components overhauls (MRO) services to the third parties.

Meanwhile, in a bid to bolster air travel between the United States and South America, LATAM Airlines LTM inked a codesharing deal with Delta Air Lines DAL. Delta also grabbed headlines by virtue of its November traffic report, wherein load factor (% of seats filled by passengers) declined as capacity expansion exceeded traffic growth. An expansion- related update was also available from Hawaiian Holdings’ HA subsidiary — Hawaiian Airlines — in the past week.

(Read the last Airline Stock Roundup here)

Recap of the Past Week’s Most Important Stories

1. Through the launch of GOL Aerotech, Gol Linhas has extended its expertise in aircraft maintenance to third-party airlines across the globe. Some of the first customers of GOL Aerotech, which provides a new revenue-generating to the carrier, are Capital Group and Dubai Aerospace. The unit is expected to generate revenues of R$140 million in 2020. Notably, Gol Linhas has been performing MRO on its own single fleet of Boeing aircraft in this center for more than 13 years. (Read more: Gol Linhas' New Business Unit Offers Maintenance Services)

GOL Linhas carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Delta announced plans to introduce codesharing for certain flights operated by affiliates of LATAM Airlines in Colombia, Ecuador and Peru. Subject to government approval, the codesharing is set to launch in the first quarter of 2020. Delta hopes to extend the codeshare in future by covering more destinations. Together with LATAM, the carrier plans to introduce frequent flyer program reciprocity and reciprocal lounge access. (Read more: Delta to Boost Connectivity Via Codesharing With LATAM)

Meanwhile, Delta’s November’s consolidated traffic, measured in revenue passenger miles, increased 1.8% year over year to 17.14 billion. Consolidated capacity, measured in available seat miles, expanded 4% to 20.41 billion on a year-over-year basis. Consolidated load factor decreased 180 basis points to 84%.

Additionally, the carrier recorded an on-time performance (mainline) of 89.6% and a completion factor (mainline) of 99.93%. Delta’s passenger count rose 1.7% to 15.73 million in the month. However, cargo ton miles declined 4.1% in the same month on a year-over-year basis.

3. To broaden its service network in Japan, Hawaiian Airlines re-started operations connecting Fukuoka Airport and Honolulu's Daniel K. Inouye International Airport. Notably, Fukuoka is Japan’s fourth largest city.

Reportedly, the service connecting Honolulu and its Japanese sister city — Fukuoka — has re-started after more than five years. In 2014, Hawaiian Airlines had scrapped the route owing to lackluster demand. The resumption of service on Nov 26, 2019, was celebrated extensively in Honolulu. Hawaiian Airlines will operate nonstop flights four-times a week, through an Airbus A330 aircraft, on this route. (Read more: Hawaiian Airlines Expands in Japan With New Fukuoka Flights)

4.  At European low-cost carrier Ryanair Holdings RYAAY, November traffic (including 0.5 million from its LaudaMotion unit in Austria) rose 6% year over year to 11 million. However, load factor (% of seats filled with passengers) remained unaltered at 96%. The carrier’s passenger growth, excluding traffic from the LaudaMotion unit, was 4% in the month. On a rolling annual basis, total traffic increased 9% to 151.6 million. (Read more: Ryanair Posts Increase in November Traffic, Load Factor Flat)

5. In a bid to modernize its fleet, United Airlines UAL announced its decision to purchase 50 new Airbus A321XLR jets. The new planes, delivery of which will start in 2024, are aimed at replacing/retiring its current ageing fleet of Boeing 757-200 planes. The new highly fuel-efficient jets are expected to be introduced into international service in 2024, allowing this Chicago-based carrier to fly to additional destinations in Europe from its East Coast hubs in Newark/New York and Washington. Notably, the new Airbus A321XLR jets reduce overall fuel burn per seat by roughly 30% compared with previous generation planes. Further, the carrier has decided to defer the delivery of Airbus A350s until 2027.

Performance

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

The table above shows that majority of the airline stocks traded in the red in the past week. Consequently, the NYSE ARCA Airline Index decreased 1.9% to $106.61 in the period. Over the course of six months, the index appreciated 8.1%.

What's Next in the Airline Space?

Investors will look forward to November traffic reports from the likes of Allegiant Travel Company ALGT in the coming days.

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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
 
Gol Linhas Aereas Inteligentes S.A. (GOL) : 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
 
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