Seeking Alpha
Profile| Send Message|
( followers)  

Airline stocks have outperformed the S&P 500 this year. Although most of them have reported the quarterly earnings for 1Q2013, monthly traffic reports are useful in determining the short-term performance of the carriers.

The revenue passenger miles are stated in the traffic reports, and it provides clues about the carriers' future revenues. It also provides a comparison for the same period in the previous year. In addition, the traffic report includes the available seat miles, and this metric measures the carriers' revenue-generation ability.

The release of April's traffic report prompts analysis of the major and regional carriers to determine their monthly performance.

The April monthly traffic reports may be accessed by clicking the corresponding airline. Delta Air Lines (NYSE:DAL), US Airways Group (LCC), United Continental Holdings (NYSE:UAL), Alaska Air Group (NYSE:ALK), Southwest Airlines (NYSE:LUV), Copa Holdings (NYSE:CPA).

P/E

Market Cap.

RPM

% Change

ASM

% Change

Load Factor

% Change

Delta Air Lines

16.86

$15.0B

15,546,410

-0.70%

19,002,817

0.50%

81.80%

-1.00%

United Continental Holdings

$10.8B

16,521,785

-3.80%

20,212,121

2.60%

81.70%

-1.00%

Southwest Airlines

27.63

$10.1B

8,735,895

1.50%

11,233,131

4.10%

77.80%

2.00%

Copa Holdings

17.55

$5.6B

1,120,000

18.30%

1,522,000

20.00%

73.60%

-1.10%

Alaska Air Group

15.13

$4.6B

2,375,000

8.50%

2,758,000

8.90%

86.10%

-0.30%

US Airways Group

5.45

$2.6B

5,476,556

4.40%

6,546,990

3.10%

83.60%

1.10%

Table 1. Summary of April traffic report. RPM = Revenue Passenger Miles, ASM = Available Seat Miles. RPMs and ASMs are reported in thousands (000s).

Top performers (The good)

Copa Holdings was the best performer in April according to the monthly reports each carrier reported. Its RPM increased 18.30% from $947.3 million in April 2012 to $1.12 billion in April 2013. Its ASM increased by 20% from 1.26 billion to 1.52 billion for the same period. Its load factor declined by 1%, which is irrelevant due to the jump in its ASM.

Alaska Air Group also showed an outstanding performance. Its RPM increased 8.50% to $2.37 billion for April 2013 on a month-to-month basis, and its ASM increased by 8.90% to 2.75 billion miles. Its load factor decrease was insignificant.

US Airways Group increased its RPM by a modest 4.40% to $5.47 billion, and its ASM by 3.10% to 6.54 billion miles. Its load factor increased by 1.10%. The merge of US Airways and American Airlines should positively impact the company since American Airlines is also a main player in the airline industry.

Positive Performance (The modest)

Southwest Airlines saw a modest 1.50% increase in its RPM to $8.73 billion for April 2013. Its ASM increased by 4.10% as more seats were added, and its load factor increased by 2.00%. In the future, Southwest Airlines' revenue should increase as more seats are being added, and more passengers choose this airline for their travel needs.

The bad

Delta Air Lines decreased its RPM by 0.70% to $15.54 billion. It must be noted that its regional RPM declined by 8.7% from $2.01 billion in 2012 to $1.84 billion in 2013. Alaska Air Group and Southwest Airlines may be grabbing market share from Delta Air Lines. Its international RPM remained unchanged by increasing 0.20%. Further, its ASM decreased by 0.5%, mainly impacted by a decline in its regional RPM by 4.3%.

The ugly (Worst performer)

United Continental Holdings' performance in April was horrible. Its RPM decreased by 3.80% from $17.16 billion for April 2012 to $16.50 billion for April 2013. However, its domestic RPM declined by 5.7% from $7.79 billion to $7.35 billion. Its domestic ASM declined by 4.9% from 9.02 billion miles to 8.63 billion miles. This gesture translates in less revenue-generation ability since the number of available seats for purchase is declining. Further, even though the ASM declined, its load factor also declined by 1.0%. It seems that passengers are flying on regional airlines such as Alaska Airlines and US Airways.

Take home message

Overall, these airlines have seen appreciation in their stock price-per-share YTD. However, the revenue of United Continental Holdings is declining and it could hurt its PPS. Delta Air Lines is faring better than United Continental because its international RPM is stable. However, the carrier is also losing domestic market share which could hurt the company in the near future.

Alaska Air Group's aggressive growth strategies have resulted in positive numbers. The company's presence has increased and more flights are being inaugurated. It is becoming a threat to major airlines.

Finally, Copa Holdings had an outstanding performance in April. The company increased its available seat miles by 20%, which means 20% more seats available for purchase. Even though its ASM jumped significantly, the company had no issues in selling the extra seats it added, since the load factor diminished by 1%. As a result, its revenue passenger miles jumped 18.30%, which will brings significant growth for the company. For these reasons, Copa Holdings is an excellent candidate for investors to gain exposure to the airline sector.

Source: Airline Stocks Beating The S&P In 2013