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Airline Stock Roundup: U.S. Airfares Continue to Rise, JBLU, CPA, LTM in Focus

Maharathi Basu

In the past week, the Bureau of Transportation Statistics declared that air fares in August increased on a month-on-month basis. In fact, this was the second successive month of hike in air fares. The increase can be attributed to reduced capacity, following the groundings of Boeing 737 MAX jets and high non-fuel unit costs.  

The update on ticket prices apart, the past week saw airline players like JetBlue Airways JBLU, Alaska Air Group ALK, Copa Holdings CPA and LATAM Airlines LTM releasing their respective traffic reports for August. Apart from JetBlue, all the aforementioned carriers reported an increase in load factor (% of seats filled with passengers). LATAM Airlines also hit the headlines due to the decision of its CEO to retire next year.

On the price front, most airline stocks declined on Sep 16, following the spike in oil prices due to the Saudi oil attack. Consequently, the NYSE ARCA Airline Index declined 2.91% compared with Sep 13’s closing price. However, over the past five trading days, the index gained, albeit, marginally.

(Read the last Airline Stock Roundup here)

Recap of Past Week’s Most Important Stories

1. August air ticket prices in the United States increased 1.7% on a month-on-month basis. This followed the 2.3% increase in air fares in July. In another air fare-related update, Scott Kirby, the president of United Airlines UAL, stated at a conference that there is scope for the company to increase air fares even after the Boeing 737 MAX jets resume operations next year. Notably, United Airlines has 14 Boeing 737 MAX jets in its fleet. (Read more: U.S. Air Fares Rise for 2 Months in a Row: What Lies Ahead?)

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

2. At JetBlue, August traffic, measured in revenue passenger miles (RPMs), increased 3.9% year over year to 4.91 billion. Consolidated capacity (measured in available seat miles/ASMs) expanded 6.1% to 5.64 billion on a year-over-year basis. However, load factor contracted 180 basis points (bps) to 86.9% in the month as traffic growth was outpaced by capacity expansion. (Read more: JetBlue's August Traffic Rises, Load Factor Falls)

3. At Copa Holdings, RPMs slipped 3% to 1.81 billion in August. Also, consolidated capacity (measured in available seat miles/ASMs) decreased 5% year over year to 2.13 billion. Load factor improved 180 bps as traffic decline was less than decrease in capacity. (Read more: Copa Holdings Posts Dismal August Traffic Data, Shares Down)

4. At Alaska Air Group, RPMs increased 4.6% to 5.19 billion in August. Moreover, ASMs rose 4.2% to 6.04 billion. With traffic growth outpacing capacity expansion, load factor improved 30 bps to 86%. Load factor increased 30 bps to 84.4% in the first eight months of 2019. (Read more: Alaska Air Group Reports Impressive August Traffic)

5. Backed by strong demand for air travel, August’s consolidated traffic (measured in revenue passenger kilometers) increased 2.5% to 10.5 billion at LATAM Airlines. However, consolidated capacity (measured in available seat miles/ASMs) declined 0.2% to 12.53 billion, reflecting capacity discipline. Consolidated load factor improved to 83.9% from 81.6% a year ago. Passenger count climbed 6.6% to 6.37 million. (Read more: LATAM Airlines' Traffic and Load Factor Increase in August)
 

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 majority airline stocks traded in the green over the past week, even though the gains were mostly muted in nature, resulting in the NYSE ARCA Airline Index gaining 0.5% to $96.67. Over the course of six months, the same appreciated almost 1% despite incurring double-digit loss at the likes of American Airlines AAL and Spirit Airlines SAVE.

What's Next in the Airline Space?

With oil prices expected to remain high at least over the next few days, investors will await updates of the same on airline stocks.

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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
 
LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report
 
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