Sat, Jul. 25, 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.
Fri, Jul. 24, 6:57 AM
- Deutsche Bank upgrades United Continental (NYSE:UAL) to a Buy rating from Hold after digesting Q2 results.
- The investment firm was puzzled by UAL's mild drop yesterday on the heels of a quarter with record profit.
- Previously: United Continental EPS in-line, misses on revenue (Jul. 23 2015)
- Previously: Fuel savings help United Continental cut into F/X headwinds (Jul. 23 2015)
Thu, Jul. 23, 8:44 AM
- United Continental (NYSE:UAL) reports consolidate passenger revenue fell 3.4% to $8.7B in Q2.
- Ancillary revenue increased 6.7% Y/Y.
- Passenger revenue growth by region: U.S. +0.2%, Atlantic -6.4%, Pacific -6.9%, Latin America -4.9%.
- Passenger revenue per available seat mile fell 5.6%.
- Aircraft fuel expense -32.1% to $2.106B.
- The company authorizes a new $3B buyback program.
- Previously: United Continental EPS in-line, misses on revenue
- UAL +2.21% premarket to $58.33.
Thu, Jul. 23, 7:33 AM
Fri, Jul. 17, 3:58 PM
- United Continental (NYSE:UAL) is slowing its pace of expansion this year to 1% or less, according to CFO John Rainey.
- Most of the major U.S. carriers have made the same general statements on limiting capacity growth this year, a development which has caught the eye of the DOJ.
- Previously: Airline fares up 2% in June (July 17)
Fri, Jul. 17, 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
Thu, Jul. 16, 3:40 AM
- In a first for the U.S. airline industry, United Continental (NYSE:UAL) has awarded millions of frequent flier miles to hackers who have uncovered gaps in the carrier's web security.
- United unveiled the approach in May just weeks before technological glitches grounded its entire fleet twice.
- Through the "bug bounty" program, researchers flag problems before hackers can exploit them. The cost can be less than hiring outside consultancies.
Tue, Jul. 14, 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)
Mon, Jul. 13, 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.
Thu, Jul. 9, 5:12 PM
- United Continental (NYSE:UAL) reports revenue passenger miles increased 1.3% to 19.359B in June.
- Domestic miles rose faster the international miles due in part to lower demand in Latin America.
- Capacity was up 2.2% to 22.438B available seat miles, led by a 4.7% increase on domestic routes.
- June load factor -80 bps to 86.3%.
- YTD load factor -70 bps to 82.6%.
- UAL +0.1% AH.
Thu, Jul. 9, 11:20 AM
- U.S. airlines face at least 15 antitrust legal actions over allegations of fare collusion, according to a count by The Dallas Mornings News.
- Most of the lawsuits cite public comments made by airline officials on the need to maintain capacity discipline and tacit understandings instead of documented agreements.
- Airline stocks as a group are ahead of market averages on the day.
- Related stocks: DAL, UAL, AAL, SAVE, RJET, HA, ALK, JBLU, VA, ALGT.
- Related ETF: JETS.
- Previously: Airline stocks fall; DOJ probing price collusion (Jul. 01 2015)
- Previously: Airlines' talk of "discipline" may have led to antitrust probe, experts say (Jul. 02 2015)
Wed, Jul. 8, 10:20 PM
- United Continental's (NYSE:UAL) computer glitch today that forced it to ground its fleet, cancel more than 60 flights and delay nearly 1,200 more is just the latest in a series of problems that suggest the company continues to struggle in its operations five years after its merger.
- Today’s problem followed another brief grounding of UAL’s fleet in early June and marked at least the fifth such incident for the airline since 2012; UAL has had three CIOs since 2011, with the current CIO joining last September.
- The grounding is another example of how dependent Americans are on data management and communications systems, and recent history suggests UAL is more vulnerable to such problems than its competitors.
- UAL also is wrestling with unhappy unions, poor punctuality and a recent increase in maintenance-related delays and cancellations; in June, nearly half of UAL’s flights arrived late, up from 37% in April, and the rate of delays and cancellations due to maintenance for its 767 fleet alone doubled from May.
- Analysts say UAL’s labor problems contribute to poor morale that can affect service quality; the airline's 21K flight attendants have been trying to reach a joint agreement since 2012.
Wed, Jul. 8, 10:29 AM
- A ground stop for United Airlines (UAL -1.8%) has been lifted, following a warning of an "automation issue" earlier this morning. Flights were grounded for less than two hours.
- United experienced a similar issue last month, halting all takeoffs in the U.S. because of computer automation issues.
- FAA Advisory
Wed, Jul. 8, 9:00 AM
Mon, Jul. 6, 2:15 PM
- Believing its merger integration work is now "in the seventh inning" and that margin/cash flow growth is in store, CRT Capital's Michael Derchin has upgraded United Continental (NYSE:UAL) to Buy, and set a $70 target.
- Derchin cites UAL's recent decision to suspend its money-losing transcontinental service at New York's JFK Airport and redeploy assets to its profitable Newark hub as an example of its "proactive focus on cost control and revenue enhancement programs." Larger buybacks and an improving Q3/Q4 revenue outlook are seen as potential catalysts.
- The upgrade comes 5 days after UAL and other airline stocks sold off in response to news of a DOJ price-collusion probe.
Thu, Jul. 2, 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).
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