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Airline Stock Roundup: UAL, HA, DAL's Bullish Q1 Unit Revenue Views & More

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Tilly's (TLYS) closed the most recent trading day at $16.18, moving -0.98% from the previous trading session.

It was a week where key airline players like Delta Air Lines, Inc. DAL, United Continental Holdings, Inc. UAL and Hawaiian Airlines — the wholly owned subsidiary of Hawaiian Holdings, Inc. HA — unveiled bullish unit revenue views for the first quarter of 2018.

While Delta and United Continental revealed their projections at the J.P. Morgan Aviation, Transportation and Industrials Conference, Hawaiian Airlines did the same in a filing with the U.S. Securities and Exchange Commission (SEC). The improved unit revenue projections reflect the increased demand for air travel.

Moreover, the likes of Southwest Airlines Co. LUV, Allegiant Travel Company ALGT, United Continental and JetBlue Airways Corp. JBLU reported traffic growth for February. Load factor (% of seats filled with passengers) increased at Southwest, Allegiant Travel and United Continental as traffic growth outpaced capacity expansion. However, the metric was flat at JetBlue.

Transportation - Airline Industry 5YR % Return

 

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Mar 08, 2018).

Recap of the Past Week’s Most Important Stories

1. Hawaiian Airlines raised its guidance for first-quarter operating revenue per available seat mile (RASM). This improvement was owing to better-than-expected passenger revenue performance in each of its geographies as well as higher cargo demand across the network. It now expects RASM to increase 3-5%, up from its previous prediction of a decline of 0.5% to a rise of 2.5%. (Read more: Hawaiian Holdings' Arm Revises Guidance for 1Q18 & Full Year).

2. At JetBlue, traffic, measured in revenue passenger miles (RPMs), improved 6.8% year over year to 3.69 billion.

On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) also expanded 6.8% to 4.47 billion. Load factor remained flat at 82.6% in February as traffic growth was commensurate with capacity expansion.The low-cost carrier expects the current-quarter RASM to improve 3.5-5.5% compared with 2.5-5.5% guided earlier.

(Read more: JetBlue's February Traffic Rises, 1Q18 RASM View Tweaked). JetBlue carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. At Southwest, traffic was up 3.5% to around 8.99 billion in the month. Meanwhile, capacity or available seat miles (ASMs) inched up 1% to 11.1 billion. Also, load factor improved 200 basis points to 81% as traffic growth outpaced capacity expansion. Markedly, the load factor reading was the highest at Southwest for February.

On a separate note, Southwest announced several non-stop flights connecting important cities of the United States. The services are expected to begin this autumn (Read more: Southwest Airlines to Begin New Services This Autumn).

4 At Allegiant Travel, traffic for the total system — including scheduled service and fixed fee contract — increased 14.6% on a year-over-year basis to 937.28 million. System capacity improved 11.1% to 1.14 billion in the same month. With traffic growth outpacing capacity expansion, load factor was up 250 basis points year over year to 82.2% (Read more: Allegiant Travel Reports Robust February Traffic Data).

5. United Continental expects current-quarter passenger revenue per available seat miles (PRASM) to grow between 1% and 3% (prior guidance: 0% to 2%). Furthermore, the carrier trimmed its projection for current-quarter capacity growth. The metric is now projected to expand in the band of 3.5% to 4% (prior guidance: 3.5% to 4.5%). Earnings per share in the current year are projected to lie between $6.50 and $8.50.

Moreover, February traffic was 16.33 billion, up 5.7% from the year-ago figure. Consolidated capacity increased 3.8%. Also, load factor increased 140 basis points to 78.1%. The company posted an on-time performance of 73.4% and a completion factor of 99.6% for the month.

6. Delta envisions current-quarter earnings per share in the band of 65 cents to 75 cents (prior guidance: 60 cents to 80 cents). Total unit revenues, excluding refinery sales, are now projected to grow in the band of 4-5% from the 2.5-4.5% range. Pre-tax margin is anticipated to increase between 6.5% and 7.5% (old guidance: 6%-8%).

While cost per available seat miles (CASM), excluding fuel and profit sharing, is expected to increase in the 3-4% range, capacity growth for the current quarter is projected at around 3%. Fuel price per gallon is expected in the band of $2-$2.05.

Weather-related expenses apart from other factors have impacted current-quarter unit costs. For 2018, earnings are still expected between $6.35 to $6.70 per share.

Performance

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




The table above shows all airline stocks traded in the green over the past week, on the back of impressive unit revenue projections. Consequently, the NYSE ARCA Airline index increased 5.4% to $123.65 in the period. Over the course of six months, the NYSE ARCA Airline index appreciated 13.8%, on the back of robust gains at the likes of Gol Linhas Aéreas Inteligentes S.A GOL.

What's Next in the Airline Space?

Stay tuned for the usual news updates in the space.

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Southwest Airlines Company (LUV) : Free Stock Analysis Report
 
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
 
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
 
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
 
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