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Airline Stock Roundup: UAL, JBLU & HA Earnings Beat, ALGT in Focus

Maharathi Basu

In the past week, key airline players like United Continental Holdings UAL, JetBlue Airways JBLU   and Hawaiian Holdings HA released their respective first-quarter 2019 financial numbers. All the three carriers reported better-than-expected earnings but struggled on the revenue front. While JetBlue’s top line managed to outperform marginally mainly due to high passenger revenues, United Continental and Hawaiian Holdings reported lower-than-expected revenues.

Meanwhile, United Continental’s bottom-line improved year over year owing to its prudent cost management initiatives. On the flip side, JetBlue and Hawaiian Holdings witnessed year-over-year decline in earnings primarily on account of high costs.

On the non-earnings front, Allegiant Travel Company ALGT was the primary news maker as it filed an application with the Department of Transportation (DOT) to commence service between the United States and Mexico. If approved, flights to Mexico would mark Allegiant’s debut as far as international services are concerned.

(Read the last Airline Stock Roundup here).

Recap of the Past Week’s Most Important Stories

1. United Continental’s first-quarter 2019 earnings (excluding 6 cents from non-recurring items) of $1.15 per share surpassed the Zacks Consensus Estimate of 94 cents. Operating revenues came in at $9,589 million, which fell short of the Zacks Consensus Estimate of $9,600 million. The top line, however, increased 6.2% year over year driven by higher passenger revenues. Passenger revenues, accounting for bulk (91%) of the top line, too improved 7.1%, highlighting solid demand for air travel. (Read more: United Continental Q1 Earnings Top & Rise Y/Y, Stock Up)

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

2. JetBlue’s bottom line (excluding 2 cents from non-recurring items) in the first quarter of 2019 came in at 16 cents per share, which outpaced the Zacks Consensus Estimate of 12 cents. Operating revenues totaled $1,871 million, which surpassed the Zacks Consensus Estimate of $1,865.6 million. Moreover, it compared favorably with the year-ago number. Passenger revenues, which accounted for bulk of the top line (96.3%), improved 6.5% in the quarter under review.

Additionally, this low-cost carrier issued an encouraging projection with respect to revenue per available seat mile (RASM: a key measure of unit revenue). For the second quarter, JetBlue expects RASM to grow between 1% and 4% year over year.  Placement of Easter/Passover holiday in April is expected to positively impact the metric to the tune of 2.25 points. (Read more: JetBlue Up on Q1 Earnings Beat, Upbeat RASM View)

3. Hawaiian Holdings’ first-quarter 2019 earnings (excluding 8 cents from non-recurring items) of 67 cents edged past the Zacks Consensus Estimate by a penny. However, the bottom line declined year over year. Quarterly revenues of $656.8 million missed the Zacks Consensus Estimate of $660.3 million and declined 1.3% year over year.

Passenger revenues, accounting for bulk (91.6%) of the top line, decreased 1.7% year over year. Airline traffic, measured in revenue passenger miles, increased 2.4% year over year to 4.13 billion in the quarter under review. Also, capacity or available seat miles (ASMs) expanded 2.5% to 4.85 billion. Load factor (percentage of seats filled by passengers) contracted 10 basis points to 85.1% in the reported quarter. Meanwhile, RASM in the quarter declined 3.7% year over year. Average fuel cost per gallon inched up 2% to $2 in the first quarter, while non-fuel unit costs increased 1.4%.

The company anticipates capacity to increase 1.5-3.5% in the second quarter of 2019. RASM is projected to decline 2-5% in the same period. Non-fuel unit costs are expected to either decrease 0.5% or increase up to 2.5% in the quarter. Economic fuel costs are envisioned to be $2.19 per gallon.

4. In a bid to launch international services, Allegiant Travel has sought DOT’s approval to operate non-stop scheduled flights between the United States and Mexico. By filing the application, Allegiant, which currently serves 450 domestic routes, has taken the first step to start low-fare operations to Mexico — a favorite destination for tourists. Other details like the projected dates will be announced later.


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 airline stocks exhibited a mixed trend with respect to price in the past week. The NYSE ARCA Airline Index has gained marginally over the period. Over the course of six months, the NYSE ARCA Airline Index depreciated 7.2%.

What's Next in the Airline Space?

Investors will keenly await first-quarter 2019 earnings reports from the likes of Southwest Airlines LUV, Alaska Air Group ALK and American Airlines AAL. While Southwest Airlines and Alaska Air are scheduled to report on Apr 25, American Airlines will do so on Apr 26.

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Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
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