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Airline Stock Roundup: LUV's Dim Update Due to Softness in Bookings, JBLU in News

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Maharathi Basu
·4 min read
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In the past week, Southwest Airlines LUV announced that it witnessed reduction in bookings during November. Moreover, trip cancellations swelled in the weeks prior to the Thanksgiving holiday period. With coronavirus cases surging in the United States, the trend has persisted in the current month as well.  The company expects this downtrend to trickle into the first month of 2021 too. Also, due to the slackening travel demand, United Airlines UAL issued a tepid outlook for the final quarter of 2020 as was reported in the previous week’s write up.

Notably, Southwest Airlines was also in news when it stated that it expects to resume commercial flight services in March 2021 using the Boeing 737 MAX planes. In fact, the Dallas-based carrier aims to increase the number of Boeing 737 MAX planes in its fleet beyond the current strength of 34. To this end, the airline inked a deal with The Boeing Company BA to take delivery of 35 delayed MAX 8 planes by Dec 31, 2021. Of the 35 MAX 8 planes, 16 are leased.

Meanwhile, in a major expansion update, JetBlue Airways JBLU announced that it will add 24 non-stop routes in the first half of 2021.

Recap of the Past Week’s Most Important Stories

1. In an SEC filing, management at Southwest Airlines stated that operating revenues declined 63% last month on a year-over-year basis despite being benefited by three or four points as the Thanksgiving holiday phase fell entirely in that period. The company expects operating revenues to slump 65-75% in December. Visibly, the current projection is worse than the earlier expectation in the 60-65% band, reflecting primarily the slowdown in air-travel demand. Moreover, December operating revenues are expected to be negatively impacted by seven to eight points due to the holiday shift to November 2020.

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

2. As part of its massive expansion plan, JetBlue will fly to four cities, namely Guatemala City, Key West, Los Cabos and Miami for the first time. Markedly, daily flights connecting Guatemala City and New York's John F. Kennedy International Airport will commence on Apr 15, 2021. Guatemala will be the 25th country to be served by JetBlue and through this move, the carrier aims to enhance its presence in the Latin American and Caribbean markets. JetBlue's decision to serve the busy Miami International Airport is aimed at expanding its presence in Florida.

3. Alaska Air Group’s ALK subsidiary Alaska Airlines increased its Boeing 737 MAX orders. It will now purchase 23 more 737-9 airplanes, adding to its previous order to lease 13 new Boeing 737-9 MAX aircraft. The new agreement will supplement 23 firm orders for the 737-9 fleet and more options for its future purchases. This deal brings Alaska Airlines’ 737 MAX orders and options to a total of 120 jets.

4. United Airlines is planning to call back its furloughed employees as lawmakers in the United States recently reached a consensus on a $900-billion stimulus package of which airlines are set to receive $15 billion as payroll support. Similar to United Airlines, American Airlines AAL is also expected to put its furloughed workers back into employment.


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 most airline stocks have traded in the red over the past week, causing the NYSE ARCA Airline Index to decline 7% to $78.79. The rise in coronavirus cases in the United States and the resultant slowdown in air travel induced the depreciation of stocks. Over the course of the past six months, the NYSE ARCA Airline Index has appreciated 40.6%.

What’s Next in the Airline Space?

Stay tuned for the usual news updates in this space.

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
The Boeing Company (BA) : Free Stock Analysis Report
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
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