Mon, Feb. 2, 3:02 PM
- Airline stocks retreat after oil prices make a strong move higher.
- Despite the ups and downs in the sector as developments with the oil market dominates headlines, more analysts are jumping aboard the long-term story on airlines on earnings growth potential and cash flow allocation plans.
- Today it was Raymond James coming in with upgrades on Delta Air Lines , Spirit Airlines (SAVE +1%), and United Continental to a Strong Buy.
- Decliners: Republic Airways (NASDAQ:RJET) -3.8%, Delta Air Lines (NYSE:DAL) -3.0%, Hawaiian Holdings (NASDAQ:HA) -2.7%, Southwest Airlines (NYSE:LUV) -2.5%, Alaska Air Group (NYSE:ALK) -1.9%, American Airlines Group (NASDAQ:AAL) -1.7%, Allegiant Travel (NASDAQ:ALGT) -1.5%, JetBlue (NASDAQ:JBLU) -1.4%, United Continential (NYSE:UAL) -1.2%.
Fri, Jan. 30, 6:58 PM
- Airline stocks took a beating in late trading today as crude oil futures surged 8% to pass $48/bbl, caused by a big drop in U.S. working rigs in the past week and a spike in ISIS attacks on oil-rich northern Iraq.
- SKYW -7.8%, VA -7.6%, SAVE -7.1%, AAL -6%, DAL -5.8%, RJET -5.7%, UAL -5.6%, ALK -4.5%, LUV -3.8%, LFL -3.6%, JBLU -2.1%.
Fri, Jan. 30, 9:24 AM
- Airfares for flights out of Dallas Love Field and DFW are expected to increase this year, despite the lower fuel costs for airlines across the sector.
- Though the end of the protective Wright Amendment on October 13 brought in some promotional fares to Love Field, those deals are expected to fall by the wayside amid strong demand.
- DFW is the 3rd busiest airport in the U.S. and Love Field ranks in the top 40.
- Carriers impacted by the expected lift in Dallas fares include Virgin America (NASDAQ:VA), American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL), Southwest Airlines (NYSE:LUV), United Continental (NYSE:UAL), and private SeaPort Airlines.
Thu, Jan. 29, 11:17 AM
Wed, Jan. 28, 7:50 AM
Mon, Jan. 26, 8:23 AM
- Winter Storm Juno is expected to cause widespread flight cancellations on the East Coast this week.
- JetBlue (NASDAQ:JBLU) has the highest number of cancellations today per FlightAware.com.
- United Continental (NYSE:UAL), Southwest (NYSE:LUV), SkyWest (NASDAQ:SKYW) through ExpressJet, Delta Air Line (NYSE:DAL), and American Airlines Group (NASDAQ:AAL) will also be affected.
- What to watch: The impact of major weather events on the bottom line of airlines can be complicated. Losses can be minimal in some cases as load factors actually improve, but if business travelers don't rebook trips, the loss of revenue can be a negative factor.
Thu, Jan. 22, 9:31 AM
- Airline stocks are set to rally as news from the sector continues to be favorable.
- Double-digit fuel cost declines. Check.
- Fares holding. Check.
- Passenger revenue miles outpacing capacity gains. Check.
- Analyst ratings and EPS upgrades. Check.
- Related stocks: LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA.
Thu, Jan. 22, 9:08 AM
- Southwest Airlines (NYSE:LUV) reports passenger revenue rose 2.6% on a unit basis to 44.4B in Q4.
- The company's load factor improved 160 bps Y/Y to 82.0% as revenue passenger miles outpaced capacity gains.
- Average stage length +2.6% to 722 miles.
- Average airfare +1.3% to $158.06.
- Freight revenue +12.2% to $46M.
- Economic fuel costs fell 14.1% Y/Y to $2.62 per gallon inclusive of settled hedges.
- LUV +4.61% premarket to $43.76.
Thu, Jan. 22, 8:32 AM
Wed, Jan. 21, 5:30 PM
Tue, Jan. 20, 7:41 AM
- U.S. airlines are expected to return more cash to shareholders this year and pay down debt with the money saved from lower fuel expenses.
- The carriers may also use the improvement on their balance sheet to push for better financing terms on new aircraft purchases.
- A significant drop in airfares is lower on the list with demand in the U.S. at a strong level.
- Related stocks: VA, LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET.
- Previously: Airline math: Jet fuel down 30%, fares down 5% (Jan. 16 2015)
Sat, Jan. 17, 8:25 AM
- Cowen analysts this week offered a how-to guide for playing the oil price fluctuation, identifying more than 60 stocks that could benefit in a declining oil price environment.
- Among the various nuggets of wisdom, the report notes that given the minimal contribution of petroleum to U.S. electricity generation, there is little, if any, displacement of coal burn; within the coal sector, lower crude prices mean lower diesel fuel prices, which Cowen thinks favors the operating cost structure of surface mining producers in the Powder River Basin, particularly Arch Coal (NYSE:ACI) given its diesel hedge strategy which protects it from elevated diesel levels and enables it to benefit fully in the downside of fuel costs.
- Also best able to cope with falling oil prices: ARLP, CLD, CNX, FELP, HNRG, JEC.
- Among airlines, American (NASDAQ:AAL) should not suffer the cost headwinds related to mark-to-market hedge losses, unlike peers that hedge jet fuel; Delta (NYSE:DAL) can expect a $2B hedge-related loss, Southwest (NYSE:LUV) should see a $500M loss and United (NYSE:UAL) a $200M loss.
- Cowen thinks consumers are on pace for 2015 gas savings of $100B-$150B, but the upside will not be distributed equally among retailers; the firm sees broadline retailers, namely Wal-Mart (NYSE:WMT) and Target (NYSE:TGT), as best positioned to benefit from gas deflation.
Fri, Jan. 16, 9:43 AM
- The airline fares component of CPI fell 4.7% Y/Y in December after increasing in both October and November.
- The spot price for jet fuel has dropped by more than 30% over the same time period (chart).
- Hedging strategies vary widely by airline and come into play when estimating profits in the sector.
- Previously: Hedge your bets on airliners (Dec. 23 2014)
- Related stocks: VA, LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET.
Fri, Jan. 16, 3:15 AM
- As of today, Americans will be able to visit Cuba without first seeking a license from the Treasury Department, so long as the travel meets certain criteria.
- Reacting to the news yesterday, United Airlines (NYSE:UAL) announced that it planned to seek approval to begin regular service to Cuba from Newark and Houston. Other airlines expressed similar interest.
- What remains unclear is how such an agreement might comply with the 54-year-old U.S. trade embargo, which can only be lifted by Congress and generally prohibits American companies from doing business in Cuba.
- The closed-end Caribbean Basin Fund CUBA is up 0.9% in after-hours trade.
- Related tickers: LUV, AAL, SAVE, RCL, NCLH, CCL,
Thu, Jan. 15, 2:55 PM
Tue, Jan. 13, 7:58 AM
- Cowen Research's Helane Becker takes a positive view on pricing in the airline sector for 2015 on her view domestic demand will stay strong enough to keep the pressure off of airlines to drop fares.
- A gauge of recent comments by airline execs seems to indicate the analyst is correct and airfares will be held largely level - despite the sharp drop in oil prices.
- Delta Air Lines CEO: "It’s wonderful that fuel has run down–we love it. There’s a $2 billion opportunity out there if we hold fare levels constant."
- American Airlines Group CEO: "...we don’t have plans to go off and just proactively cut fares."
- Southwest Airlines CEO: "What I would not want to do to customers is take them through the same volatile ride with fares [as 2008], lowered in one day, raised in the next day."
- U.S. carriers: LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA.
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