Airline Stock Roundup: ALK, LUV, RYAAY and HA's Earnings Beat
In the past week, sector heavyweights like Alaska Air Group ALK and Southwest Airlines LUV reported earnings for second-quarter 2023. The results were aided by upbeat air travel demand and declining fuel costs.
European carrier, Ryanair Holdings RYAAY reported better-than-expected earnings per share and revenues owing to upbeat passenger volumes. Meanwhile, Hawaiian Holdings’ HA loss narrowed in second-quarter 2023, also owing to upbeat air travel demand.
Recap of the Past Week’s Most Important Stories
1. Alaska Air Group reported second-quarter 2023 earnings per share of $3, which outpaced the Zacks Consensus Estimate of $2.70 and improved 37% year over year. Operating revenues of $2,838 million beat the Zacks Consensus Estimate of $2,780.5 million. The top line increased 7% year over year on the back of high passenger revenues. For the third quarter of 2023, Alaska Air expects capacity to improve 10-13% from the year-ago reported figure. Cost per available seat mile, excluding fuel and special items, is expected to be flat to down 2% year over year. Total revenues are anticipated to be flat to up 3% year over year. ALK forecasts economic fuel cost per gallon in the band of $2.70-$2.80.
Alaska Air currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. Southwest Airlines reported second-quarter 2023 earnings per share of $1.09, which outpaced the Zacks Consensus Estimate of $1.08 but declined 16.2% on a year-over-year basis. Revenues of $7,037 million beat the Zacks Consensus Estimate of $6,988.7 million and improved 4.6% year over year on solid leisure demand.
For third-quarter 2023, management expects available seat miles (a measure of capacity) to improve 12% from the year-ago reported figure. Economic fuel costs per gallon are expected to be between $2.55 and $2.65.
3. Ryanair Holdings reported first-quarter fiscal 2024 (ended Jun 30, 2023) earnings of $3.15 per share, which outpaced the Zacks Consensus Estimate of $2.25 and improved more than 100% year over year. Revenues of $3,972.6 million beat the Zacks Consensus Estimate of $3,587.3 million. Revenues improved year over year, driven by upbeat passenger volumes. Ryanair expects traffic of 183.5 million for fiscal 2024.
4. Hawaiian Holdings’ second-quarter 2022 loss (excluding 23 cents from non-recurring items) of 47 cents per share was narrower than the Zacks Consensus Estimate of a loss of 55 cents. HA incurred a loss of 90 cents in the year-ago quarter. The results were aided by strong air travel demand. The resumption of service between Honolulu and Fukuoka, Japan, in April, boosted passenger revenues, which increased 4.5% year over year. Driven by upbeat passenger revenues, the top line increased 2.2% to $706.9 million, edging past the Zacks Consensus Estimate of $705.1 million.
For the third quarter of 2023, available seat miles or ASM are projected to increase 4.5-7.5% from third-quarter 2022 levels. Total revenues per available seat miles are anticipated to decrease 2-5% from third-quarter 2022 levels. Costs per ASM (excluding fuel & non-recurring items) are expected to rise 7-10% from third-quarter 2022 numbers. Gallons of jet fuel consumed are expected to increase 8-11% from third-quarter 2022 level. Fuel price per gallon is expected to be $2.67 in third-quarter 2023. The effective tax rate is anticipated to be 21% in the third quarter.
ASMs are projected to increase in the 9.5-12.5% band for full-year 2023. Costs per ASM (excluding fuel & non-recurring items) for 2023 are expected to rise 1-5% from 2022 actuals. Fuel price per gallon is expected to be $2.70 in the current year. Gallons of jet fuel consumed are expected to increase 12.5-15.5% from the 2022 level.
More second-quarter 2023 earnings updates are available in the previous week’s write-up.
Price Performance
The following table shows the price movement of the major airline players over the past week and during the past six months.
Image Source: Zacks Investment Research
The table above shows that most airline stocks traded in the red in the past week. The NYSE ARCA Airline Index declined 6.5% over the period to $72.36. Over the course of the past six months, the sector tracker has surged 14.6%.
What's Next in the Airline Space?
Investors are awaiting the second-quarter 2023 earnings report of Allegiant Travel Company ALGT, scheduled to be released on Aug 2.
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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
Southwest Airlines Co. (LUV) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : Free Stock Analysis Report