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Jul. 8, 2015, 9:00 AM
Jul. 6, 2015, 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.
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%.
Jun. 30, 2015, 8:22 AM
- United Continental (NYSE:UAL) announces it purchased a $30M stake in Fulcrom BioEnergy.
- The company also plans to partner with Fulcrom on five alternative energy projects located near United hubs.
- Fulcrom is actively researching ways to convert household waste to jet fuel.
- Cathay Pacific Airways is an early round investor in Fulcrom
Jun. 26, 2015, 12:34 PM
- United Continental (UAL -0.7%) announces a strategic partnership with Azul Brazilian Airlines.
- The company will acquire a 5% stake in Azul as part of the deal and nab a seat on the board.
- United will invest $100M through a subsidiairy for the economic stake in Azul.
- United and Azul will expand their frequent flyer loyalty program as part of the deal.
Jun. 23, 2015, 9:25 AM
- Morgan Stanley digs into the airline sector with a wave of initiations.
- Top sector picks are Spirit Airlines (NASDAQ:SAVE), United Continental (NYSE:UAL), Delta Air Lines (NYSE:DAL), and Alaska Air Group (NYSE:ALK) which are set at Overweight.
- The four companies boast attractive free cash flow and EPS growth potential, according to the investment firm.
- America Airlines Group (NASDAQ:AAL) and JetBlue (NASDAQ:JBLU) are given Equal-weight ratings.
- The bear calls from MS on the group are Southwest Airlines (NYSE:LUV) and Virgin America (NASDAQ:VA), both tagged at Underweight.
- Previously: Value plays all around in the airline sector (Jun. 20 2015)
Jun. 20, 2015, 2:45 PM
- Airlines stocks are poised for a breakout as the reality of improved profits overrides concerns on capacity growth, reasons Barron's Jack Hough.
- The publication mirrors the view of many SA commenters that there's a disconnect between valuations in the sector and the degree to which lower jet fuel prices continue to prime operating earnings.
- Take for example no-hedging American Airlines Group (NASDAQ:AAL) which is estimated to save $4B a year from the lower level of jet fuel prices. Other airlines are peeling off some hedges to reap a bigger fuel benefit each quarter.
- Efficiency for U.S. airlines is still solid with a majority of airlines reporting load factors of 80% or higher, although increased competition in some markets has pushed key metric RASM lower. The most recent read on fares came in positive.
- Also in the mix is the continued growth of service fees and consolidation benefits from mergers by legacy carriers.
- P-E ratios of below 12 (based off of 2015 estimates) are common in the sector giving investors something of a value play. Republic Airways (NASDAQ:RJET) can be nabbed with a forward earnings multiple of 6.48. JetBlue (NASDAQ:JBLU) is up 27% YTD, but only trades with a 10.5 P-E collar.
- Barron's identifies American Airlines Group, Delta Air Lines (NYSE:DAL), United Continental (NYSE:UAL), and Southwest Airlines (NYSE:LUV) as four stocks that could rise 15% to 50% over the next year. If the view on the sector is spot-on - JetBlue, Virgin America (NASDAQ:VA), Hawaiian Holdings (NASDAQ:HA), Spirit Airlines (NASDAQ:SAVE), Republic Airways, Allegiant Travel (NASDAQ:ALGT), SkyWest (NASDAQ:SKYW), and Alaska Airlines Group (NYSE:ALK) should also put in gains.
- Related ETFs: JETS
Jun. 19, 2015, 10:31 AM
- Airline stocks rally off of a drop in oil prices and a week of declining concerns on unrestrained capacity growth.
- JPMorgan added to sentiment with a positive note on airline stocks in which it called the group oversold recently.
- The read on U.S. fares earlier this week was also positive.
- American Airlines Group (AAL +4.3%), United Continental (UAL +3.5%), Delta Air Lines (DAL +3%), JetBlue (JBLU +2.9%), and Hawaiian Holdings (HA +2.5%) are making the strongest gains in the sector.
- The U.S. Global Jets ETF (NYSE:JETS) is up 1.60%.
Jun. 18, 2015, 9:06 AM
- Airline fares rose 5.7% in May on a seasonally adjusted basis, according to the Bureau of Labor Statistics.
- The average fare was still down 6.6% from last year on an unadjusted basis after the sector ran off a string of months with decreases.
- Fares fell 1.3% in April and 1.7% in March.
- If the bump in fares extends it could alleviate some concerns in the industry over capacity growth.
- Related stocks: LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA, SKYW.
- BLS CPI data
Jun. 16, 2015, 12:23 PM
- United Continental (UAL -1.9%) says it will end service into New York's JFK International Airport in October.
- The company will add more United Airlines flights out of its hub in Newark as part of its p.s. Transcontinental Service.
- Delta Air Lines (DAL -0.6%) will nab the JFK slots in exchange for some additional Newark slots for United.
Jun. 10, 2015, 1:26 PM
- JPMorgan's Jamie Baker thinks fear in the airline sector over capacity growth isn't based on historical precedence.
- The analyst points to prior periods when capacity growth led to improved revenue metrics.
- The gain in revenue from extra seats counterbalances the risk carriers will need to drop prices, he reasons.
- Baker adjust his price targets in the sector based on the current level of pessimism while holding firm on a long-term bullish view.
- JP's PT changes: Delta Air Lines (NYSE:DAL) to $63 from $72, American Airlines Group (NASDAQ:AAL) to $72.50 from $84.50, United Continental (NYSE:UAL) to $78.50 from $89, Southwest Airlines (NYSE:LUV) to $42.50 from $52.
- Previously: IATA raises global airlines profit outlook (June 8)
- Previously: Airline stocks grounded on capacity concerns (June 9)
Jun. 10, 2015, 10:30 AM
- The EPA says greenhouse gases from aircraft endanger human health, a finding that begins a process to regulate greenhouse gas emissions from the aviation industry, the latest sector to be regulated under the Clean Air Act after cars, trucks and power plants.
- The endangerment finding allows the EPA to implement domestically a global carbon dioxide emissions standard being developed by the International Civil Aviation Organization; the airline industry favors a global standard over individual national standards since airlines operate all over the world and want to avoid a patchwork of rules and measures.
- GEVO, which has been working on renewable fuels for airplanes, is +3.5% today and +27% so far this month in anticipation of the EPA findings.
- Also higher are REGI +2%, SZYM +2.5%, AMRS +2%.
- Potential related stocks: AAL, UAL, SAVE, DAL, ALK, HA, SKYW, LUV, JBLU, VA
Jun. 9, 2015, 10:58 AM
- The jittery airline sector is having a volatile day once again.
- Capacity concerns have been the major focus of sellers, although the strong move higher of oil prices today is also in the background.
- American Airlines Group reported a drop in its load factor earlier as capacity growth came in ahead of revenue passenger miles.
- Though Raymond James issued a biting downgrade on American, United Continental, and Delta yesterday - some analysts such as Sterne Agee CRT's Michael Derchin think the pessimism is overdone.
- Q2 conference calls could calm fears on capacity running hot, reasons the analyst.
- A higher level of buybacks in the sector and reasonable valuations based on earnings projections are also factors.
- Sector watch: Alaska Air Group (ALK -6.4%), Southwest Airlines (LUV -5.8%), SkyWest (SKYW -3.4%), Hawaiian Holdings (HA -4.7%), Spirit Airline (SAVE -4.4%), Delta Air Lines (DAL -3.7%), Allegiant Travel (ALGT -3.6%), Republic Airways (RJET -2.9%), Virgin America (VA -2.6%), United Continental (UAL -1.8%), American Airlines Group (AAL -2%), JetBlue (JBLU -1.9%).
- The U.S. Global Jets ETF (NYSE:JETS) is down 2.96% on the day.
- Previously: American Airlines Group's capacity up 2% in May
Jun. 8, 2015, 6:20 PM
- Revenue passenger miles rose 0.5% to 18.245B for United Continental (NYSE:UAL) in May.
- Available seat miles were up 2.1% to 21.741B, led by gains in domestic capacity and new routes in Latin America.
- May load factor -140 bps to 83.9%.
- YTD load factor -60 bps to 81.8%.
- UAL flat in AH trading.
Jun. 8, 2015, 9:33 AM
- IATA raises its estimate for 2015 global airline profits to $29.3B from a prior forecast of $25B.
- Lower oil prices and a focus in the industry on efficiency are both cited by the association as positive factors.
- IATA says load factor is at a record high of 80.2%.
- Global airline stocks: AAL, UAL, DAL, RYAAY, OTCPK:CPCAY, OTCPK:SINGY, CEA, ZNH, CPA, GOL, LFL, OTCPK:DLAKF, OTCPK:QUBSF, ALK, HA, OTCPK:AIRYY, OTCPK:MLYAF, OTCPK:AFLYY, VLRS, LUV, AVH, OTCPK:JAPSY, OTC:AFRAF, OTC:EJTTF, OTC:WJAFF, OTC:WJAVF, OTCQX:ESYJY, OTCPK:ICAGY, VLRS, OTC:GRPAF.
- Related ETFs: JETS
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