Fri, Aug. 28, 12:05 PM
- Airline stocks are holding up pretty well considering the strong breakout in oil prices over the last two days.
- The sector didn't rally in full force as oil broke to multi-year lows earlier this week, giving it some leeway with today's move. The wild swings in oil prices also brings the question of hedging strategy back into play. Strategic bets may prime earnings or be a drag depending on timing. American Airlines Group (NASDAQ:AAL) doesn't hedge and just rolls with the market. Delta Air Lines (NYSE:DAL) and United Continental (NYSE:UAL) prefer to hedge against a sudden spike in oil.
- The U.S. Global Jets ETF (NYSEARCA:JETS) is +0.66% on the day, helped in part by a big rally in UAL after its addition to the S&P 500.
Fri, Aug. 28, 9:53 AM
Fri, Aug. 28, 9:17 AM
Thu, Aug. 27, 5:39 PM
- Activision Blizzard (NASDAQ:ATVI) will replace Pall Corp. (NYSE:PLL), and United Continental (NYSE:UAL) will replace Hospira (NYSE:HSP) in the S&P 500 after the close of trading on Aug. 28 and Sept. 2, respectively.
- S&P 500 member Danaher is acquiring Pall, and Hospira is being acquired by Pfizer.
- ATVI +6.3%, UAL +6.8% AH.
Thu, Aug. 27, 5:39 PM
Wed, Aug. 19, 9:19 AM
- Airlines fares fell 5.6% M/M in July to mark the sharpest drop in the index since December 1995, according to the Bureau of Labor Statistics.
- The average fare was also 5.6% lower than the level from a year ago on an unadjusted basis.
- Lower jet fuel expenses and an increased focus on price collusion in the sector are both in the background.
- Related stocks: LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA, SKYW.
- Related ETF: JETS.
- BLS CPI data
Mon, Aug. 17, 8:40 AM
- Delta Air Lines (NYSE:DAL) wants the government to halt flights out of the U.S. by Middle East carriers as the State Department probes the impact of subsidies on competition.
- The company has the backing of unions repping its workers in calling out state-owned Etihad, Emirates, and Qatar Airways for unfair practices in violation of Open Skies agreements.
- American Airlines Group (NASDAQ:AAL) and United Continental (NYSE:UAL) also back a crackdown on the Middle East carriers.
Fri, Aug. 14, 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.
Tue, Aug. 11, 7:34 AM
- United Continental (NYSE:UAL) reports revenue passenger miles rose 2.8% to 20.462B in July. Atlantic routes showed the strongest growth with a gain of 6.1%.
- Capacity increased 2.4% to 23.509 available seat miles.
- July load factor +30 bps to 87.0%.
- YTD load factor -50 bps to 83.3%.
- The company estimates its average fuel cost during the month was $1.73-$1.78. The mark goes up to $1.97-$2.02 if all hedging activity is factored in.
Mon, Aug. 10, 10:54 AM
Fri, Aug. 7, 2:40 PM
- A Senate report concludes the government should crack down on some fees in the airline industry after finding no relationship between expenses and pricing on ancillary services.
- Members of the Commerce, Science and Transportation Committee are expected to bring legislation to the Senate floor later this year.
- United Continental (NYSE:UAL) earned over $5.6B in ancillary fees last year to lead the sector.
- Related ETFs: JETS.
- Previously: U.S. airline profit at record level (Jul. 31 2015)
Tue, Aug. 4, 10:56 AM
- John Rainey, United Airlines' (UAL +1.4%) CFO since 2012, is leaving to become the CFO of PayPal (PYPL -0.7%), which is less than a month removed from being fully spun off from eBay.
- Rainey succeeds Patrick Dupuis, PayPal's CFO since 2010. Dupuis will remain at PayPal in the newly-created role of SVP of Simplicity, Quality, and Productivity - he'll "lead a corporate-wide transformation initiative designed to drive PayPal's productivity, service quality and customer experience." Both Rainey and Dupuis will report to CEO Dan Schulman.
- United has named finance SVP/treasurer Gerry Laderman its acting CFO while it searches for Rainey's permanent successor. Both internal and external candidates will be vetted.
Fri, Jul. 31, 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.
Wed, Jul. 29, 9:47 AM
- United Airlines (UAL -1.2%) was attacked by the same group of Chinese hackers that illegally accessed federal personnel records and medical data, sources tell Bloomberg.
- The company hasn't disclosed a breach.
- It's not known if a computer systems outage at United earlier this month is related to the hacking incident.
- Analysts note a state-sponsored attack could be part of a spy game instead of a crime motivated by financial gain, although they also warn United's M&A strategy may have been revealed.
- Related ETF: HACK.
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)
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