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Airline Stock Roundup: AZUL Posts Loss in Q4, ALGT's February Traffic Improves

In the past week, Azul S.A. AZUL reported a narrower loss in the fourth quarter of 2023 than a year ago, mainly owing to higher revenues driven by upbeat passenger volumes. Meanwhile, Spirit Airlines SAVE inked a significant agreement with International Aero Engines, or IAE, an affiliate of Pratt & Whitney. Per the terms of the deal, SAVE will get monthly credit from IAE, which would boost its liquidity.

Allegiant Travel’s ALGT scheduled traffic for the month of February improved year over year, reflecting upbeat air travel demand. JetBlue Airways JBLU expanded transatlantic service to Paris in a bid to broaden its international operations. Alaska Air Group’s ALK management believes that its long-term profitability is likely to be hurt due to the temporary grounding of its Boeing 737 Max 9 fleet.

Recap of the Recent Most Important Stories

1. Azul incurred a loss of 47 cents per share in the fourth quarter of 2023, wider than the Zacks Consensus Estimate of a loss of 22 cents. Loss per share was 83 cents in the fourth quarter of 2022. Total revenues of $1,015.6 million lagged the Zacks Consensus Estimate of $1,016.8 million but increased year over year. The year-over-year top-line improvement was mainly due to the robust growth in passenger revenues. With more people taking to the skies, Azul’s passenger revenues, contributing 92.7% to the top line, increased 13.2% year over year (on higher total capacity). Cargo and other revenues grew 9.5% year over year.

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2. At Allegiant Travel, scheduled traffic (measured in revenue passenger miles) grew 0.4% from February 2023 levels. Capacity (measured in available seat miles) for scheduled service improved 2.1% from the February 2023 reading. The load factor (percentage of seats filled by passengers) in February 2024 came in at 84%. Total departures (scheduled services) grew 0.2% in February 2024 from its year-ago levels. Moreover, its average stage length (miles) improved 1.3%. Currently, ALGT carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. Per Spirit Airlines’ deal with IAE, credit will be given to SAVE for each aircraft unavailable due to problems with geared turbofan ("GTF") engines discovered in July 2023. GTF engines are produced by Pratt & Whitney. The agreement, estimated to bolster Spirit's liquidity by $150 million to $200 million, hinges on the number of days aircraft are grounded due to engine issues throughout 2024. Additionally, Spirit has agreed to release IAE from any claims related to impacted engines until the end of the year, with further discussions planned with Pratt & Whitney for ongoing support beyond 2024.

4 In line with the efforts to expand its network, JetBlue expanded its Paris service with its inaugural flight from Boston. JetBlue’s new flight between Boston and Paris Charles de Gaulle Airport follows the successful launch of service from New York’s John F. Kennedy International Airport last summer. In addition to Paris, JetBlue offers daily service to London and Amsterdam. Recently, the carrier launched a seasonal service to Dublin from Boston.

5. Alaska Air’s management stated that the lost capacity due to the temporary grounding of its Boeing 737 Max 9 fleet is likely to result in the company's long-term profit growth slipping below its target of 4-8%. ALK’s fleet includes 65 Boeing 737 Max 9 jets.

Alaska Air was also in the news recently when its aircraft maintenance technicians, maintenance controllers and supporting staff, represented by the Aircraft Mechanics Fraternal Association, approved a new five-year contract. The story was covered in detail in the previous week’s write-up.

Performance

The following table shows the price movement of the major airline players over the past week and during the last six months.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

The table above shows that most airline stocks traded in the red over the past week. The NYSE ARCA Airline Index declined 4% to $64.38. Over the course of the past six months, the NYSE ARCA Airline Index gained 24.4%.

What’s Next in the Airline Space?

Stay tuned for further news updates in the space.

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JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report

Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report

Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report

Allegiant Travel Company (ALGT) : Free Stock Analysis Report

AZUL (AZUL) : Free Stock Analysis Report

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Zacks Investment Research