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Airline Stock Roundup: UAL Posts Q3 Loss, AAL Gives Boeing 737 MAX Update & More

Maharathi Basu
·4 min read

In the past week, United Airlines UAL reported wider-than-expected loss for third-quarter 2020. This underperformance was due to a massive drop in passenger revenues as air-travel demand remains suppressed due to the prevalent coronavirus pandemic. With the COVID situation continuing to wreak havoc on the airline space, United Airlines became the second carrier after Delta Air Lines DAL to report a loss for the September quarter. Notably, Delta’s results were mentioned in the previous week’s write-up.

American Airlines AAL also grabbed headlines by virtue of its announcement that it plans to resume services on the grounded Boeing 737 MAX aircraft at the end of this year. Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group ALK, was in news when it launched Embraer 175 jet service in Alaska.

Synopsis of the Past Week’s Top Stories

1.     United Airlines, currently carrying a Zacks Rank #3 (Hold), incurred a loss (excluding $1.83 from non-recurring items) of $8.16 per share, comparing unfavorably with the Zacks Consensus Estimate of a loss of $7.63. Moreover, operating revenues of $2,489 million slumped 78.1% year over year and also lagged the Zacks Consensus Estimate of $2,570.1 million. This year-over-year plunge was due to the 84.3% drop in passenger revenues to $1,649 million. However, the carrier’s move to operate cargo-only flights due to declining passenger revenues paid off as revenues from the same surged 49.6% year over year to $422 million. Meanwhile revenues from other sources fell 32.3% in the September quarter to $418 million.

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

2. American Airlines management reportedly   stated that the carrier expects to restart passenger flights on the MAX jets just a few days after Christmas, contingent on Boeing getting all the necessary federal approvals. Notably, the Boeing 737 MAX aircraft have been grounded since March 2019 following two crashes, which killed 346 passengers. Ever since, the aircraft has been under scrutiny and underwent software and other changes. American Airlines aims to resume flying the jets in phases from Dec 29, operating a daily 737 MAX flight between Miami, FL and New York through Jan 4, 2021.

3 Alaska Airlines launched services on the Embraer 175 jet in the state of Alaska beginning Oct 18. The E175, operated by Alaska Air’s regional partner Horizon Air, is operating in a few selected markets of the state. The commencement of services on these smaller jets (76 seats) allows the carrier to increase its daily frequency between Anchorage and Fairbanks apart from providing a year-round service to King Salmon and Dillingham. The smaller jets have no middle seats. They have 12 seats each in the first and premium classes in addition to 52 in the main cabin.

4. On Oct 18, passenger count (by air) in the United States crossed the 1-million mark for the first time since March. Notably, the Transportation Security Administration (TSA)   screened 1,031,505 passengers last Sunday.  The surging number of passengers screened by the TSA at the airports bodes well for the airlines ahead of the holiday season.

Performance

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 green over the past week. Evidently, the NYSE ARCA Airline Index has appreciated 2.2% to $60.76. Moreover, during the course of the past six months, the NYSE ARCA Airline Index has surged 35.4%.

What’s Next in the Airline Space?

Investors will look forward to the third-quarter 2020 results of the likes of Southwest Airlines LUV as well as American Airlines on Oct 22. Meanwhile, JetBlue Airways JBLU is scheduled to release third-quarter earnings performance on Oct 27

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Southwest Airlines Co. (LUV) : Free Stock Analysis Report
 
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : 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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