Thu, Jul. 30, 2:42 PM
Thu, Jul. 30, 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)
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, 3:44 PM
Thu, Jul. 23, 9:15 AM
Thu, Jul. 23, 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.
Thu, Jul. 23, 7:16 AM
Wed, Jul. 22, 5:30 PM
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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
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. 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).
Wed, Jul. 1, 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%.
Tue, Jun. 30, 4:37 PM
- Southwest Airlines (NYSE:LUV) is now the only option for travelers seeking to fly with a major U.S. carrier without paying extra for checked baggage, as JetBlue (NASDAQ:JBLU) says it will begin charging for the first checked piece of luggage.
- Fliers who booked flights before Tuesday will still check a suitcase for free, but those booking last-minute summer vacations and other trips on or after today must pay up to $25 for their first checked bag.
- "JetBlue sees it as an opportunity to unbundle the fares and offer a lower base fare to certain customers and better monetize the bag fee," a Stifel Financial analyst says.
Wed, Jun. 24, 1:52 PM
- Southwest Airlines (LUV -1%) could pick up ground on legacy carriers when promotional fares in key markets fade, reasons Imperial Capital.
- The investment firm notes a higher percentage of Southwest's drop in RASM (revenue per available seat miles) is tied to promotions on new routes, giving it more upside when those markets normalize.
Tue, Jun. 23, 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)
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