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Aug. 14, 2015, 9:16 AM
- Airline stocks are on watch as U.S. crude oil prices hit their lowest level in six years.
- The sector hasn't rallied with the same vigor as it did with previous swings lower in oil which has some analysts calling for a delayed rally.
- Though many companies left some savings on the table due to hedging activity, fuel cost per mile flown ranged lower by 20% to 45% in the sector during Q2.
- Earlier this week, Raymond James pitched the case that airlines will use fare increases to cover rising labor costs, leaving fuel expense savings for balance sheet moves.
- Related stocks: DAL, UAL, AAL, SAVE, RJET, HA, ALK, JBLU, VA, ALGT, LUV.
- Related ETF: JETS.
Aug. 11, 2015, 8:14 AM
- Southwest Airlines (NYSE:LUV) reports revenue passenger miles increased 8.2% to 11.5B in July.
- Capacity was 7.0% higher at 13.1B available seat miles.
- July load factor +100 bps to 87.7% to mark a record for the carrier.
- YTD load factor +80 bps to 83.3%.
- The company estimates operating revenue per available seat mile will fall 1.0% in Q3.
- LUV +0.32% premarket to $37.91.
Jul. 31, 2015, 1:27 PM
- U.S. airline companies generated net income of over $5.7B in Q2 off of operating revenue that was roughly in-line with the level from last year.
- Analysts expect the benefit of lower fuel prices and the high level of ancillary fee growth to continue into Q3 and Q4. While regulatory pressure may be dialed up with a collusion probe hanging over the sector, efficiency is seen firming up as strategic capacity growth feeds revenue.
- Share prices haven't quite kept up with profit growth across much of the sector on skittish reactions by some investors to ongoing developments (hacking, labor, flight disruptions, PRASM guidance).
- Forward P-E ratios below 10: American Airlines Group (NASDAQ:AAL), United Continental (NYSE:UAL), Delta Air Lines (NYSE:DAL), Hawaiian Holdings (NASDAQ:HA), Virgin America (NASDAQ:VA), Republic Airways (NASDAQ:RJET), SkyWest (NASDAQ:SKYW), Southwest Airlines (NYSE:LUV).
- Forward P-E ratios below 10-15: JetBlue (NASDAQ:JBLU), Alaska Air Group (NYSE:ALK), Spirit Airlines (NASDAQ:SAVE).
- Forward P-E ratios +15: Allegiant Travel (NASDAQ:ALGT).
- Related ETF: JETS.
Jul. 30, 2015, 2:42 PM
- Southwest Airlines (NYSE:LUV) declares $0.075/share quarterly dividend, in line with previous.
- Forward yield 0.82%
- Payable Sept. 10; for shareholders of record Aug. 20; ex-div Aug. 18.
Jul. 30, 2015, 6:56 AM
- JPMorgan upgrades Southwest Airlines (NYSE:LUV) to an Overweight rating.
- The investment firm lifts the price target on the airline stock to $50 from $42.50. The new PT implies 41% upside for LUV based on last night's close of $35.54.
- Previously: Southwest Airlines rides fuel savings to record profit (Jul. 23 2015)
Jul. 25, 2015, 12:31 PM
- Airlines stocks ended the week on a down note, despite record profits being reported by American Airlines Group (NASDAQ:AAL), United Continental (NYSE:UAL), and Southwest Airlines (NYSE:LUV).
- Investors kept their sharp focus on key metric PRASM (passenger revenue per available seat mile) by turning skittish when American execs warned fare pressure will keep PRASM growth negative into 2016.
- Fares fell in May and June on an unadjusted basis as reported by the BLS, but perhaps an even bigger eye-opener was the 19% drop reported by Spirit Airlines (NASDAQ:SAVE) on average ticket revenue per flight segment - a sign of promotional pressure.
- Regulatory pressure also continues to be a larger factor. The DOT is now probing Delta Airlines (NYSE:DAL), United Continental, Southwest Airlines, and Jetblue (NASDAQ:JBLU), for possible price-gouging following the Amtrak train crash in Philadelphia. That follows a broader DOJ investigation into capacity growth collusion.
- Hedging: Though lower fuel costs continue to a major tailwind, some airlines were burned by increasing hedging activity too quickly. No-hedging American reported a 38.5% drop in fuel per available seat mile in Q2, while United Continental had to absorb a $118M hedging loss which lowered its consolidated fuel expense savings to 32% Y/Y. United said it's building up a small hedge heading into 2016 (UAL earnings call transcript).
- Related stocks: HA, ALK, ALGT, VA, RJET.
- Related ETF: JETS.
Jul. 24, 2015, 3:44 PM
Jul. 23, 2015, 9:15 AM
Jul. 23, 2015, 7:31 AM
- Southwest Airlines (NYSE:LUV) says it generated record GAAP operating income of $1.1B in Q2.
- Passenger revenue was up 2.1% to $4.852B, while freight revenue was 4.6% higher at $46M.
- Wages and benefit expenses +14.3% to $1.61B.
- Fuel savings were significant during the quarter with the economic fuel cost dropping 33% to $2.02 per gallon.
- Average passenger fare -3.4% to $157.51.
- Load factor +70 bps to 84.6%.
- Passenger revenue per available seat mile -4.6% to $0.1330.
- Return on invested capital (ex-taxes and special items) jumped to 28.2% from 17.1% a year ago.
- Previously: Southwest Airlines beats by $0.01, misses on revenue
- LUV +3.16% premarket to $36.23.
Jul. 23, 2015, 7:16 AM
- Southwest Airlines (NYSE:LUV): Q2 EPS of $1.03 beats by $0.01.
- Revenue of $5.11B (+2.0% Y/Y) misses by $30M.
Jul. 22, 2015, 5:30 PM
- ABB, ABC, ADS, AEP, ALK, AMAG, AOS, ASPS, BCC, BHE, BKU, BMS, BMY, BSX, CAB, CAM, CAT, CELG, CFX, CLFD, CMCSA, CMS, COR, CS, CSL, CY, DAN, DFRG, DGX, DHR, DLX, DNKN, DOW, DPS, DST, EQM, EQT, FAF, FCX, FIS, FNB, GM, GMT, GNTX, GPI, GPK, HBAN, HERO, HUB.B, IMAX, IQNT, IVC, JNS, KKR, KMB, LAZ, LLY, LUV, MAC, MCD, MHO, MINI, MJN, MMM, MNRO, MRGE, NDAQ, NEO, NUE, NWE, ORI, PDS, PENN, PHM, PRLB, PTEN, QSII, R, RCI, RS, RTN, SCHL, SFE, SHPG, SNA, SQNS, STC, STM, SYNT, TCB, TROW, UA, UAL, UNP, USG, UTEK, VAC, VRX, WAB, WCC, WIT, WM, WRLD, XRS
Jul. 17, 2015, 8:48 AM
- Airline fares rose 2.0% Y/Y in June on a seasonally adjusted basis, according to the Bureau of Labor Statistics.
- The average fare was 1.3% lower than the level from a year ago on an unadjusted basis.
- The increase in fares for the month follows a 5.7% jump in May.
- There's a bit of a balancing act with fares for airlines amid a DOJ probe on collusion. Though heavyweight industry execs are looking for fare stabilization and controlled capacity increases, they are very likely to keep a tight rein on their public comments. Most analysts don't think there is a smoking gun on collusion similar to the infamous taped conversations between Braniff and American execs in the 1980s.
- Related stocks: LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA, SKYW.
- Related ETF: JETS.
- BLS CPI data
Jul. 14, 2015, 11:04 AM
- It's a topsy-turvy day for the airline sector with JetBlue (JBLU +1.5%) impressing with its June traffic numbers and Spirit Airlines (SAVE -8.5%) disappointing with guidance.
- The bigger story might be the forecast on oil prices after the Iran nuclear deal was hammered out.
- Though oil prices haven't moved off dramatically with the timing of excess supply on the market unknown, the development is a long-term consideration for airlines which are looking for a sustained period of lower jet fuel prices.
- Also on the radar, capacity concerns have been dialed back a bit over the last week, while a report yesterday on booming ancillary revenue in the sector painted a bright picture.
- Trading is mixed on Delta Air Lines (DAL +0.2%), American Airlines Group (AAL -0.8%), United Continental (UAL -0.5%), Virgin America (VA -0.4%), Allegiant Trading (ALGT -0.8%), Hawaiian Holdings (HA -0.5%), Alaska Airl Group (ALK +0.4%), Republic Airway (RJET -1.9%), and Southwest Airlines (LUV -0.4%).
- There's always the U.S. Global Jets ETF (NYSEARCA:JETS) for a broad sector play.
- Previously: Load factor impresses at JetBlue (Jul. 14 2015)
- Previously: Spirit Airlines cuts 2015 op. margin guidance; shares -4.8% (Jul. 13 2015)
Jul. 13, 2015, 2:33 PM
- Ancillary revenue in the airline industry rose 21% last year, according to analysis from IdeaWorks and CarTrawler.
- Low-cost carriers saw a 33% jump in extra fees, while the U.S. majors realized a 19% increase.
- Ancillary revenue at United Continental (NYSE:UAL) was $5.681B to lead all airlines.
- Spirit Airlines (NASDAQ:SAVE), Allegiant (NASDAQ:ALGT), and Ryanair (NASDAQ:RYAAY) all showed +24% gains in ancillary revenue.
- Jet2.com (OTC:DRTGF) , Spirit, and Qnatas Airways (OTCPK:QUBSF, OTCQX:QABSY) all made more than $50 per passenger.
- Though bags fly free at Southwest (NYSE:LUV), the carrier still saw a 16% rise in ancillary revenue to $1.885B due in part to the popularity of its Rapid Rewards program.
Jul. 2, 2015, 6:25 PM
- Frequent assurances by U.S. airline executives that they would maintain "discipline" when adding seats on competitive routes were a red flag for antitrust regulators eyeing possible collusion between the four largest air carriers - American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL), United Continental (NYSE:UAL) and Southwest Airlines (NYSE:LUV) - antitrust experts say.
- At a meeting last month in Miami of the International Air Transport Association, at least three senior airline execs stressed the need for "discipline" - "The word 'discipline' is a no-no," says one antitrust expert, who adds that the Justice Department probe should not be a surprise.
- Another antitrust expert thinks the investigation's actual goal could be to prod the airline industry to reduce prices and give travelers more of the benefit of the recent sharp fall in fuel prices.
- Cowen airline analyst Helane Becker says the DoJ collusion claims are without merit, and recommends buying the best airline stocks on the weakness caused by the news; her top picks remain UAL, DAL, LUV and Alaska Airlines (NYSE:ALK).
Jul. 1, 2015, 2:31 PM
- A DOJ spokeswoman states the agency is probing potential "unlawful coordination" between some airlines. The AP states a document obtained by the news service indicates the DOJ is "investigating whether airlines are colluding to grow at a slower pace as part of an effort to keep airfares high." No word yet on which airlines are being probed.
- Airline stocks have sold off in response. Decliners include United Continental (UAL -4.3%), American Airlines (AAL -4.1%), Southwest (LUV -4.5%), Delta (DAL -4.2%), Alaska Air (ALK -1.7%), Hawaiian Holdings (HA -4.8%), JetBlue (JBLU -5%), Spirit Airlines (SAVE -3.1%), SkyWest (SKYW -4.1%), and Virgin America (VA -1.9%).
- The U.S. Global Jets ETF (NYSE:JETS) is down 2.8%.
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