Airline Stock Roundup: SAVE Gives Expansion Update, GOL, RYAAY in Focus

Last week was relatively quiet for the airline industry. The week, which had a day less of trading owing to Christmas, saw low-cost carrier Spirit Airlines SAVE continue with its efforts toward expanding internationally as it announced its intentions of adding a couple of routes from South Florida. European low-cost carrier Ryanair Holdings RYAAY was also in news as it faced a pilots’ strike due to issues related to pay and work conditions.

Additionally, Moody's Investors Service, the rating services arm of Moody's Corporation, has upgraded the ratings of Latin American carrier Gol Linhas’ GOL debt, which includes the corporate family rating to B2 from Caa3. The firm upgraded GOL’s ratings as a result of its strong operating performance on the back of an improving Brazilian economy. According to a Reuters report, passengers in a plane operated by JetBlue Airways JBLU escaped unhurt after the plane skidded off a taxiway in Boston after landing.

Transportation - Airline Industry 5YR % Return

 

Transportation - Airline Industry 5YR % Return

On the price front, the NYSE ARCA Airline Index gained almost 1% to $118.04 over the past week.

(Read the last Airline Stock Roundup for Dec 20, 2017).

Recap of the Past Week’s Most Important Stories

1. Spirit Airlines announced the addition of two new international destinations from Fort Lauderdale-Hollywood International Airport. The Miramar, Florida-based carrier will begin a daily non-stop service to the José Joaquín de Olmedo International Airport in Guayaquil, Ecuador from Mar 22, 2018 onward. Besides, it will initiate a nonstop service to the Cap-Haïtien International Airport, starting Apr 12, 2018. This will complement the carrier’s existing service to Port-au-Prince (Read more: Spirit Airlines to Add Two Global Routes From South Florida).

Spirit Airlines carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2. Ryanair, which has been witnessing labor strife for quite some time now, saw its pilots resort to a four-hour strike. This was reportedly the first time its pilots went on strike.  Operations were not disrupted significantly as a result of the pilots’ action. Flights got delayed but not a single one was cancelled. Disruptions were limited to the token strike, after the Irish carrier averted the possibility of a series of strikes across Europe, after agreeing to recognize unions.  

3. GOL Linhas, which has had an impressive 2017, received a further shot in the arm when Moody's issued an upgraded rating. The outlook was changed to stable. Capacity discipline, cost-cutting initiatives apart from a strong demand for air travel to Latin America have aided the company this year. Moody's believes that GOL will perform impressively next year too, driven by the tailwinds.

4. Inclement weather has been disrupting operations of U.S. carriers of late. Extensive snowfall in Boston resulted in delays as the departure/arrival of flights at Boston’s Logan Airport were halted on Christmas Day for about an hour due to snow-induced reduced visibility. Amid this scenario, a JetBlue Airways plane (AirBus A320) skidded off a snow-filled taxiway at the airport. Thankfully the mishap, which occurred on Dec 25 night, did not result in any injuries.

5. In a customer-friendly move, Delta Vacations, the official vacation provider at Delta Air Lines DAL, added six new destinations across the United States to its portfolio. The destinations are Asheville, N.C.; Aspen, Colo.; Panama City, Fla.; Oakland, Calif.; Lexington, Ky.; and Fairbanks, Alaska. Passengers can avail of a wide range of accommodations such as boutique hotels, country inns and beach resorts at each destination.

Performance

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

 

The table above shows that all airline stocks traded in the green over the past week primarily due to the optimism surrounding the tax overhaul, which is expected to aid airlines significantly. However, the gains were muted in nature. Shares of JetBlue Airways gained the most (6.1%).

Over the course of six months, the NYSE ARCA Airline Index appreciated 2.3% on the back of impressive gains at Latin American carriers GOL Linhas and Copa Holdings CPA. Share prices of the likes of Spirit Airlines and Alaska Air Group ALK have declined appreciably in the period due to multiple headwinds.

What's Next in the Airline Space?

We expect December traffic reports from the likes of Delta in the coming days.
 

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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
 
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
 
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
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