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,
Tue, Jan. 13, 10:35 AM
- United Continental (UAL +2.4%) plans to outsource labor at 28 airports to an outside vendor, according to a spokesperson.
- Employees at several major airports received notices earlier this week on potential job losses.
- United says it's following the lead of American Airlines and Delta Air Lines in using 3rd-party workers.
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.
Tue, Jan. 13, 2:51 AM
- United Airlines (NYSE:UAL) may again turn to outsourcing to slash expenses, helping the airline meet its goal of cutting costs by $2B annually.
- United may now outsource another 2K workers across 28 airports, after outsourcing over 630 jobs in July of last year.
- Other U.S. carriers have also kept costs low because many of its workers lack union representation, including Delta Air Lines (NYSE:DAL).
Wed, Jan. 7, 2:25 PM
- Despite the brisk rally in airline stocks, Credit Suisse thinks there is plenty of upside still left.
- "The market has been hesitant to fully price in benefits from the rapid fuel decline and consensus has yet to fully adjust for lower fuel," reads the optimistic CS note.
- Analysts with the firm tap United Continental (NYSE:UAL) as their top sector pick.
- Airline stocks: LUV, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA.
Mon, Jan. 5, 3:18 PM
- ETF Series Solutions is planning a new ETF based on the airliner sector.
- The fund will hold 25 to 40 airline stocks and attempt to mirror the U.S. Global Jets Index.
- The development comes with airline stocks on a tear after jet fuel prices dropped sharply.
- Two former airline ETFs (FLYX and FAA) didn't survive long enough to cruise through the rally.
- Airline stocks: RYAAY, OTCPK:CPCAY, OTCPK:SINGY, CEA, ZNH, CPA, GOL, LFL, LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, RYAAY, CPA, GOL, LFL, AVH, SAVE, VLRS.
- SEC Form N-1A
Dec. 31, 2014, 5:26 PM
- United (NYSE:UAL) and Orbitz (NYSE:OWW) have filed suit against Aktarer Zaman, a 22-year-old programmer who created a site (Skiplagged.com) that helps travelers save on airfare through a practice known as "hidden city" ticketing.
- How it works: Travelers buy (cheaper) flights to cities other than their intended destinations, but which have a layover at their intended locales. The traveler flies to the layover destination, and doesn't bother with the rest of the flight.
- If adopted on a larger scale - many frequent fliers are already well aware of the concept - the use of hidden ticketing could cost airlines (and their online travel agency partners) millions. United/Orbitz claim Skiplagged is promoting "strictly prohibited" travel. Zaman insists he's doing nothing illegal, and is simply exposing an "inefficiency" in airfare pricing.
- A legal fund established by Zaman has received over $38K in donations.
Dec. 31, 2014, 10:07 AM
- Airline stocks are in rally mode again off of momentum driven by the latest slide in oil prices.
- Southwest Airlines (LUV +2.2%) is poised to end the year as the top performing stock of the S&P 500 Index with a +125% rip.
- Though jet fuel hedging strategies vary widely throughout the sector, a prolonged period of lower oil prices will allow all carriers to realize a benefit.
- Gainers: Republic Airways (NASDAQ:RJET) +4.4%, United Continental (NYSE:UAL) +2.4%, Virgin America (NASDAQ:VA) +1.9%, JetBlue (NASDAQ:JBLU) +1.8%, Alaska Air Group (NYSE:ALK) +1.7%, Allegiant Travel (NASDAQ:ALGT) +1.6%, Delta Air Lines (NYSE:DAL) +1.6%, SkyWest (NASDAQ:SKYW) +1.4%.
- Previous: Hedging strategies by airline
Dec. 24, 2014, 2:40 PM
Dec. 23, 2014, 10:06 AM
- The type of hedging strategies used by airliners will play a big part in profitability in the sector after the sharp drop in jet fuel prices.
- Delta Airlines (NYSE:DAL) estimates it keeps about 65% of the drop in fuel costs, but will owe $800M to counterparties (the other side of the hedge) if oil is 20% lower on December 31, 2015 from where it stood on October 1, 2014. By Delta's estimation, a penny drop in oil prices is a net $40M to the good side.
- Southwest Airlines (NYSE:LUV) forecasts it will reap $0.80 for every $1 drop in oil prices, but disclosed a $615M liability to creditors if crude oil prices stay below 25% from the level of September 30.
- American Airlines Group (NASDAQ:AAL) will realize the full impact from the drop in fuel costs on its bottom line due to the decision by the company not to hedge at all.
- Other airliners could also have some hedging exposure, although details are light on the strategies employed in the sector.
- What to watch: Q1 reports and conference calls in the sector could be key in filling in some of the blanks. Related stocks: UAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA.
Dec. 23, 2014, 8:26 AM
- U.S. airliners as a group showed a 2.6% gain to 16.40 (cents) in fares earned per revenue passenger mile in November, according to data from Airlines for America.
- A 4.0% Y/Y increase for the metric on domestic routes offset a 1.4% decline in international flights.
- The YTD mark is up 2.3% to 16.53.
- Related stocks: ALK, AAL, DAL, JBLU, LUV, UAL.
Dec. 15, 2014, 3:14 PM
- Senator Charles Schumer calls on the DOT to probe the airline industry for the high level of airfares despite the drop in jet fuel costs and booming airliner profits.
- By most tabulations, airfares have held steady over the last few weeks.
- Previously: IATA: Profits to rise 26% for airliners in 2015 (Dec. 10 2014)
- U.S. carriers: LUV, UAL, DAL, AAL, JBLU, ALK, HA, SAVE, ALGT, RJET, VA.
Dec. 15, 2014, 11:18 AM
Dec. 10, 2014, 9:49 AM
- Airline stocks rip a fresh set of gains after oil prices weaken again and the IATA issues a rosy forecast on 2015 profit for the sector.
- There has also been a wave of analyst upgrades on airliners which has boosted sentiment.
- Leading gainers: Southwest Airlines (NYSE:LUV) +3.1%, United Continental (NYSE:UAL) +3.1%, Spirit Airlines (NASDAQ:SAVE) +2.7%, American Airlines Group (NASDAQ:AAL) +2.6%, China Eastern Air (NYSE:CEA) +2.4%, Republic Airways (NASDAQ:RJET) +2.4%, Virgin America (NASDAQ:VA) +2.0%, China Southern Airlines (NYSE:ZNH) +1.9%.
Dec. 10, 2014, 8:36 AM
- IATA forecasts airline profits will rise 10.6% Y/Y to $19.9B this year.
- The outlook from the research firm for 2015 is for 25.6% jump in profit to $25B.
- Consumers can expect to see a 5.1% decline in airfares next year, while cargo shippers should pay 5.8% less.
- On a per-passenger basis, IATA thinks the the airline industry will show a net profit of $7.08 in 2015 vs. $6.02 in 2014 and $3.38 in 2013.
- The profit gains are tied to lower oil prices and improved GDP numbers across key sections of the globe.
- Airline stocks: AAL, UAL, DAL, RYAAY, OTCPK:CPCAY, OTCPK:SINGY, CEA, ZNH, CPA, GOL, LFL, OTCPK:DLAKF, AIDIF, OTCPK:QUBSF, JBLU,ALK, HA, OTCPK:AIRYY, OTCPK:MLYAF, OTCQX:AFLYY, VLRS, LUV, RJET, SAVE, ALGT, VA.
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