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The Zacks Analyst Blog Highlights: American Airlines, Southwest, Alaska Air, SkyWest and Spirit

Zacks Equity Research
Ryanair's (RYAAY) fiscal 2019 profit declines 29% due to low airfares.

For Immediate Release

Chicago, IL – May 1, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include American Airlines Group AAL, Southwest Airlines LUV, Alaska Air Group ALK, SkyWest SKYW andSpirit Airlines SAVE.

Here are highlights from Tuesday’s Analyst Blog:

Airline Stock Roundup: Q1 Earnings Beats for AAL, LUV & More

In the past week, several airline companies like American Airlines Group, Southwest Airlines, Alaska Air Group, SkyWest and Spirit Airlines released their respective first-quarter 2019 financial numbers.

Apart from Spirit Airlines, all the above-mentioned carriers reported better-than-expected earnings per share. However, shares of American Airlines declined due to its decision to slash its earnings guidance for 2019. American Airlines now expects 2019 earnings per share between $4 and $6 (earlier outlook:  $5.50-$7.50). Updates on Boeing 737 MAX jets and fuel costs induced the company to slash its earnings guidance.

Spirit Airlines too issued a disappointing view with respect to cost per available seat mile (CASM), excluding fuel (non-fuel unit costs), for the second quarter. Notably, the construction work scheduled at the Ft. Lauderdale airport during 2019’s summer and a severe storm on Apr 19 were the primary reasons behind this bearish projection.

(Read the last Airline Stock Roundup here)

Recap of Past Week’s Most Important Stories

1. American Airlines’ first-quarter 2019 earnings (on an adjusted basis) of 52 cents per share edged past the Zacks Consensus Estimate by a penny. However, the bottom line decreased on a year-over-year basis due to high costs.  Revenues totaled $10,584 million, which missed the Zacks Consensus Estimate of $10,656.24 million but improved 1.8% on a year-over-year basis. Passenger revenues, which accounted for the bulk of the top line, rose 1.9%. (Read more: American Airlines Stock Down Despite Q1 Earnings Beat)

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

2. Southwest Airlines delivered first-quarter 2019 earnings of 70 cents per share, which exceeded the Zacks Consensus Estimate of 61 cents. However, the bottom line declined year over year. Results were affected to the tune of approximately $150 million due to flight cancellations, effects of the government shutdown and softness in bookings. Operating revenues of $5,149 million outpaced the Zacks Consensus Estimate of $5,140.9 million and also rose 4.1% year over year. Passenger revenues, accounting for the bulk (92.2%) of the top line, improved 3.5% year over year. (Read more: Southwest Q1 Earnings & Revenues Top Despite Headwinds)

3. Alaska Air Group’s first-quarter 2019 adjusted earnings came in at 17 cents per share, which surpassed the Zacks Consensus Estimate of 13 cents. The bottom line also improved on a year-over-year basis. Revenues totaled $1,876 million and came above the Zacks Consensus Estimate of $1,872.97 million. The top line also rose year over year. The company anticipates capacity to rise approximately 1% in the second quarter of 2019. Additionally, unit revenues are estimated to increase in the 2-5% range in the same period. (Read more: Alaska Air Group Q1 Earnings Top, Q2 RASM View Up)

4. SkyWest’s first-quarter 2019 earnings (on an adjusted basis) of $1.33 per share surpassed the Zacks Consensus Estimate of $1.18. The bottom line also improved 29% on a year-over-year basis. Results benefited from the company’s fleet transition initiatives. Quarterly revenues came in at $724 million, beating the Zacks Consensus Estimate of $707 million. However, the top line declined year over year owing to the sale of ExpressJet Airlines in January 2019. Operating expenses also declined to 9.8% to $627 million. Expenses on salaries, wages and benefits decreased 16% to $257.6 million. (Read more: SkyWest’s Q1 Earnings & Revenues Surpass Estimates)

5. Spirit Airlines’ first-quarter 2019 earnings per share (excluding 2 cents from non-recurring items) of 84 cents came in line with the Zacks Consensus Estimate. Meanwhile, the bottom line improved significantly on a year-over-year basis mainly owing to low fuel costs.

On the flip side, operating revenues of $855.8 million in the first quarter marginally missed the Zacks Consensus Estimate of $856.1 million. However, the top line improved 21.5% year over year on the back of a 16% rise in flight volume and favorable passenger yields, and load factor (% of seats filled by passengers). Passenger revenues, accounting for the bulk (97.9%) of the top line, jumped 21.6% year over year. (Read more: Spirit's Q1 Earnings Meet, CASM View Weak, Stock Down)

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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