Yahoo Finance Airline Stock Roundup: LUV's Dull Q2 Unit Revenue View, DAL's Expansion Update
This week, Southwest Airlines LUV lowered its outlook for second-quarter revenue per available seat miles (RASM: a measure of unit revenues). Management cited a change in booking patterns as the reason for trimming the guidance for this key metric.
Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group ALK, grabbed headlines for its tentative deal with the union representing its flight attendants. Meanwhile, Delta Air Lines DAL announced its intention to launch a seasonal route this winter to cater to the anticipated demand swell during the period. Ryanair Holdings RYAAY has decided to operate extra flights over the weekend from Dublin in response to the pilot strikes at another Irish carrier, Aer Lingus.
Recap of the Recent Most Important Stories
1 Due to complexities associated with adapting its revenue management to current booking patterns in this dynamic environment., Southwest Airlines lowered its outlook for second-quarter 2024 unit revenues. The company now expects RASM to decline in the 4% to 4.5% range from the year-ago reported figure (the earlier guidance indicated a year-over-year decline between 1.5% and 3.5%). Despite the reduced outlook, LUV still expects to post record quarterly operating revenues for the June quarter. Non-fuel unit costs are still expected to increase in the 6.5%-7.5% range from the second-quarter 2023 actuals. On an encouraging note, the company said that despite weather-related woes in Texas and Florida, the completion factor, on a quarter-to-date basis, averaged an impressive 99.5%.
Southwest Airlines currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. In a customer-friendly move, Delta stated that it intends to launch flights from London Heathrow to Orlando in Florida this winter. DAL will operate this seasonal route four times a week in the Oct 26, 2024-Mar 29, 2025 time frame. An A330-900neo aircraft will operate on the route. Once this route becomes operational, Orlando will become DAL's eighth destination in the United States to be served directly from London this winter season. The route will also be the airline’s first non-stop one between the United Kingdom and Florida.
DAL was in the news recently when its management announced a 50% dividend hike. The story was covered in detail in the previous week’s write-up.
3 Alaska Airlines inked a provisional pay-related agreement with the Association of Flight Attendants-CWA. The tentative deal covers more than 6,500 flight attendants of Alaska Airlines. The deal, on materialization, is likely to result in a significant pay raise for the concerned employees. The provisional deal has been reached after two years of negotiations.
4. To meet the surge in demand anticipated due to the delays/cancellations arising out of the Aer Lingus pilot strike, Ryanair will operate extra flights to popular destinations from Dublin. The flights will operate from London Stansted, Malaga and Faro airports. Ryanair’s chief marketing officer, Dara Brady, stated, “We decided last week not to increase air fares in response to the Aer Lingus pilot strikes. As a result, many of our flights next weekend have completely sold out. We are pleased to be able to add these extra flights to London, Malaga and Faro next weekend using one of our spare aircraft.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
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 decreased 1.8% to $55.91. Over the past six months, the NYSE ARCA Airline Index has decreased 18.8%.
What’s Next in the Airline Space?
With air travel demand expected to soar through the roof this summer, we expect airlines to boost capacity to meet the anticipated demand swell. Updates on this front cannot be ruled out in the coming days. Traffic-related updates for the month of May are also expected.
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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
