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The Zacks Analyst Blog Highlights: Delta Air Lines, American Airlines Group, JetBlue Airways, Gol Linhas Aereas Inteligentes S.A. and Spirit Airlines

Zacks Equity Research
Updated
ASGN vs. FICO: Which Stock Is the Better Value Option?

For Immediate Release

Chicago, IL – Jan 18, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Delta Air Lines DAL, American Airlines Group AAL, JetBlue Airways JBLU, Gol Linhas Aereas Inteligentes S.A. GOL and Spirit Airlines SAVE.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday’s Analyst Blog:

Airline Stock Roundup: DAL, AAL, JBLU and More

It was a week which saw Delta Air Lines kick-starting the fourth-quarter earnings season for the airline space on an impressive note. The company’s earnings as well as revenues surpassed expectations.

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Moreover, this Atlanta, GA-based company’s top and bottom lines expanded on a year-over-year basis. Strong demand for air travel during the holiday season aided results.

On the non-earnings front, the key sector players like American Airlines Group and JetBlue Airways revealed bullish projections on unit revenues for fourth-quarter 2017. Latin American carrier Gol Linhas Aereas Inteligentes S.A. also grabbed headlines as it provided encouraging fourth-quarter guidance.

Spirit Airlines grabbed headlines by virtue of its improved fourth-quarter unit revenue guidance.

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Jan 10, 2018).

Recap of the Past Week’s Most Important Stories

1. Delta’s fourth-quarter earnings (excluding 16 cents from non-recurring items) of 96 cents per share beat the Zacks Consensus Estimate of 88 cents. Moreover, the bottom line expanded 17.1% on a year-over-year basis. Results were aided by higher revenues. Passenger revenue per available seat mile (PRASM: a key measure of unit revenue) was up 4.2% year over year.

Delta lifted its earnings per share guidance for 2018. The new tax law, which will reduce its corporate tax rate significantly, is expected to aid the company’s performance (Read more: Delta Air Lines Q4 Earnings Beat, FY18 View Upped).

2. American Airlines issued an upbeat guidance for the fourth quarter of 2017. The company now expects total revenue per available seat mile (TRASM) for the quarter to rise in the range of 5-6% year over year compared with 2.5-4.5% projected earlier. The improved outlook can be attributed to higher yields across all the geographical regions and better-than-expected domestic close-in bookings.

Additionally, the company expects pre-tax margin between 6.5% and 7% for the to-be reported quarter. Earlier forecast was in the band of 4.5-6.5% (Read more: American Airlines' Shares Rise on Bullish Q4 Outlook).

3. GOL Linhas anticipates fourth-quarter operating margin in the range of 13.2%-14.2%. This metric (excluding non-recurring expenses) was 12.8% in the year-ago quarter. GOL expects third-quarter unit revenue (RASK) to increase in the 7%-7.5% band.

The airline expects earnings before interest, tax, depreciation and amortization (EBITDA) and earnings before interest and taxes (EBIT) margins, both excluding non-recurring expenses, in the range of 17.5-18.5% and 13.2-14.2%, respectively. Ancillary Revenues (cargo and other) are projected between 12% and 12.2% of total net revenues. Aircraft Rent is projected to be approximately R$230 million in the soon-to-be-reported quarter.

Average fuel price per liter is anticipated to be between R$2.25 and R$2.28. Meanwhile, the carrier expects to incur non-recurring expenses in the range of R$30-R$35 million in the fourth quarter.

Passenger unit revenue (PRASK) is projected to increase between 7% and 7.5% year over year in the to-be-reported quarter as the airline is benefiting from capacity discipline and revenue management strategies. The carrier expects non-fuel unit costs (CASK ex-fuel), excluding non-recurring expenses, to increase approximately 1.6% year over year. Also, capacity (ASK) is projected to expand around 3% year over year in the same time period.

Currently, GOL Linhas sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

4. JetBlue also provided an improved guidance for fourth-quarter RASM. The carrier now expects RASM to increase approximately 1.8%. Previous view had hinted the metric in the band of -0.5% to +1.5%. The low-cost carrier raised its projection for fourth-quarter cost per available seat miles (excluding fuel) by 2 percentage points as a result of the bonus of $1,000 per member, following the new tax law. Fourth-quarter fuel cost per gallon is expected in the band of $1.89 to $1.92.

Meanwhile, December load factor declined 140 basis points to 82.7% as traffic growth (2.7%) was outpaced by capacity expansion (4.4%). In the same month, the carrier registered a completion factor (system wide) of 99.8% with 74.1% flights on schedule.

5. At Spirit Airlines, traffic — measured in revenue passenger miles (RPMs) — came in at 2.14 billion, up 14.8% on a year-over-year basis. Consolidated capacity (or available seat miles/ASMs) also expanded 14.7% to 2.66 billion.

Load factor increased 10 basis points to 80.4% in December 2017. The improvement was owing to traffic growth outpacing capacity expansion. In the same month, the carrier registered a completion factor (system wide) of 98.7% with 80.4% flights on schedule.

Spirit Airlines now expects fourth-quarter TRASM to decline roughly 2% year over year, (previous guidance: decline in the band of 4% to 6%). Better-than-expected yields during the peak holiday periods contributed to the improved guidance. Adjusted cost per available seat miles (excluding fuel) is expected to decline approximately 4% in the soon-to-be-reported quarter.

 Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.


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