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Airline Stock Roundup: GOL's Q4 Picture Impressive, HA, DAL in Focus

Zacks Equity Research

In the past week, Latin American carrier — GOL Linhas Aereas Inteligentes GOL — reported better-than-expected earnings per share for fourth-quarter 2018. Moreover, net revenues improved 10.1% year over year owing to solid demand for air travel and favorable pricing.

On the non-earnings front, the past week saw Southwest Airlines LUV move a step closer to commencing operations to Hawaii, with the low-cost carrier selling extremely low-priced tickets for travel on the routes. Following this development, shares of Hawaiian Holdings HA — the parent company of Hawaiian Airlines — declined in double digits as Hawaii is the carrier’s main market for revenue generation.

Delta Air Lines DAL was also in the news courtesy of its February traffic report. While traffic increased, load factor (percentage of seats filled with passengers) declined as traffic growth was outpaced by capacity expansion. An expansion related update was also available from JetBlue Airways JBLU during the same period.

(Read the last Airline Stock Roundup for Feb 28, 2019)

Recap of the Past Week’s Most Important Stories

1. Gol Linhas’ fourth-quarter 2018 earnings of 38 cents per share surpassed the Zacks Consensus Estimate of 21 cents. Passenger revenues increased 10.3%, reflecting strong demand for air travel. Moreover, average fares increased 6.7% in the quarter under review. The carrier also raised its earnings per share view for 2019 and 2020. (Read more: Gol Linhas Q4 Earnings Beat,'19 & '20 EPS View Up).

2. Shares of Hawaiian Holdings declined as competition is likely to intensify with Southwest Airlines entering its primary market — Hawaii. Moreover, Southwest offered much cheaper tickets than Hawaiian Airlines on the routes.

Southwest Airlines will start Hawaiian operations on Mar 17 with a flight between Oakland & Honolulu. Operations between Oakland and Kahului airport will commence on Apr 7. Flights connecting San Jose to Honolulu and Kahului will take to the skies from May 5 and May 26, respectively.  

Moreover, Southwest Airlines’ inter-island service will commence on Apr 28 with flights connecting Honolulu & Kahului. The other inter-island service will feature flights connecting Honolulu & Kona. The services will commence on May 12. (Read more: Hawaiian Holdings Down in Yesterday's Trading: Here's Why).

3. At Delta, consolidated traffic — measured in revenue passenger miles (RPMs) — came in at 15.11 billion, up 2.9% year over year. Consolidated capacity (or available seat miles/ASMs) climbed 3.9% to 18.65 billion on a year-over-year basis. Additionally, the carrier recorded an on-time performance (mainline) of 81.6% and a completion factor (mainline) of 99.9%. Approximately, 13.32 million passengers boarded its flights in February. (Read more: Delta's Traffic Rises But Load Factor Falls in February).

In a separate development, the carrier maintained its earnings per share guidance for 2019. At the JPMorgan Aviation, Transportation & Industrials Conference, Delta said that it continues to expect current-year earnings between $6 and $7 per share. Revenue growth is anticipated in the 4-6% range for 2019. Moreover, the carrier aims to reward its shareholders to the tune of approximately $2.5 billion in the current year through dividends and buybacks.

4. In a bid to strengthen its presence in South America, JetBlue started operating daily flights to Guayaquil, Ecuador from Fort Lauderdale-Hollywood International Airport. Guayaquil is the carrier’s sixth Latin-American destination. JetBlue is operating on this new route via Airbus A320 jets, equipped with all modern amenities. (Read more: JetBlue Boosts South American Base With Flights to Guayaquil).

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

5. At Ryanair Holdings RYAAY, February traffic (including 0.3 million from its LaudaMotion unit) rose 13% year over year to 9.6 million. Load factor increased to 96% from 95% a year-ago. Notably, this European carrier operated more than 53,000 scheduled flights in February. In fact, Ryanair was the most punctual among the other major carriers in the EU with more than 93% of its scheduled flights arriving on time (excluding ATC delays) in the month.

Price 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 red over the past week causing the NYSE ARCA Airline Index to decrease 3%. Over the course of six months, the sector tracker increased 11%.

What's Next in the Airline Space?

Investors will await February traffic reports from the likes of Allegiant Travel Company ALGT in the coming days.

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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : 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
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
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