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,
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%.
UAL vs. ETF Alternatives
Other News & PR