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In the past week, investors were in for some good news as Delta Air Lines’ (DAL - Free Report) management announced the reinstatement of its practice of paying quarterly dividends after a COVID-induced hiatus.
Allegiant Travel Company (ALGT - Free Report) was also in the news following a pay-related tentative deal inked by the carrier with the Transport Workers Union or TWU, which represents nearly 1,900 flight attendants of ALGT. An expansion-related update was also made available from Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group (ALK - Free Report) in the past week.
Copa Holdings (CPA - Free Report) reported a double-digit increase in revenue passenger kilometers or RPK (a measure of traffic) for the month of May, driven by upbeat air travel demand. More May traffic-related updates were discussed in the previous week’s writeup.
Recap of the Past Week’s Most Important Stories
1. Delta Air Lines’ board of directors approved a quarterly dividend payment of 10 cents per share. The renewed dividend will be paid on Aug 7, 2023, to all shareholders of record as of Jul 17, 2023. This Atlanta-based carrier had to suspend its dividend payout during the COVID-19 pandemic. The restrictions under the CARES Act prohibited airline companies from paying dividends or buying back shares till Sep 30, 2022.
This resumption is indicative of Delta's progress on its three-year financial plan (which includes debt repayment of more than $10 billion in the last two years). Delta currently carries a Zacks Rank #3 (Hold).
2. Copa Holdings’ RPK and available seat kilometers (a measure of capacity) increased 15.8% and 15.3%, respectively, on a year-over-year basis at Copa Holdings. With traffic growth outpacing capacity expansion, the load factor (percentage of seats filled by passengers) improved to 86.1% from 85.7% in May 2022.
3. The provisional deal inked by ALGT and TWU includes significant increases to wages, improvements to retirement benefits and other perks for flight attendants. However, the five-year deal will be effective only if it is successfully ratified. For that, it will be put to vote. The voting procedure is expected to take place later this month.
On a separate note, ALGT’s scheduled traffic (measured in revenue passenger miles) dropped 3% in May 2023 from the year-ago levels. Capacity for scheduled service decreased 2.2% from the May 2022 reading. With the traffic plunge outweighing capacity contraction, the load factor in May dropped 0.7 points to 85.9% from the year-ago period’s levels. For the total system (including scheduled service and fixed fee contract), Allegiant carried 3.3% less passengers in May 2023 from the year-ago period’s level.
4. In a bid to meet the anticipated demand swell in the winter season this year, Alaska Airlines management has decided to add three new routes to its network. Under its expansion plan, the carrier will start operating non-stop on the Portland-Miami, Palm Springs-New York JFK and San Luis Obispo-Las Vegas routes. While the daily year-round flights on the Portland-Miami route will take to the skies from Nov 17, flights on the other two routes will operate from Dec 14. Flights on the San Luis Obispo-Las Vegas route will operate daily. The Palm Springs-New York JFK route is seasonal.
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 all airline stocks traded in the green over the past week, resulting in the NYSE ARCA Airline Index gaining 6% to $74.06. Over the course of past six months, the NYSE ARCA Airline Index has appreciated 39%.
What’s Next in the Airline Space?
Stay tuned for the usual news updates in the space.
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Airline Stock Roundup: DAL's Dividend Resumption, ALGT's Labor Deal & More
In the past week, investors were in for some good news as Delta Air Lines’ (DAL - Free Report) management announced the reinstatement of its practice of paying quarterly dividends after a COVID-induced hiatus.
Allegiant Travel Company (ALGT - Free Report) was also in the news following a pay-related tentative deal inked by the carrier with the Transport Workers Union or TWU, which represents nearly 1,900 flight attendants of ALGT. An expansion-related update was also made available from Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group (ALK - Free Report) in the past week.
Copa Holdings (CPA - Free Report) reported a double-digit increase in revenue passenger kilometers or RPK (a measure of traffic) for the month of May, driven by upbeat air travel demand. More May traffic-related updates were discussed in the previous week’s writeup.
Recap of the Past Week’s Most Important Stories
1. Delta Air Lines’ board of directors approved a quarterly dividend payment of 10 cents per share. The renewed dividend will be paid on Aug 7, 2023, to all shareholders of record as of Jul 17, 2023. This Atlanta-based carrier had to suspend its dividend payout during the COVID-19 pandemic. The restrictions under the CARES Act prohibited airline companies from paying dividends or buying back shares till Sep 30, 2022.
This resumption is indicative of Delta's progress on its three-year financial plan (which includes debt repayment of more than $10 billion in the last two years). Delta currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. Copa Holdings’ RPK and available seat kilometers (a measure of capacity) increased 15.8% and 15.3%, respectively, on a year-over-year basis at Copa Holdings. With traffic growth outpacing capacity expansion, the load factor (percentage of seats filled by passengers) improved to 86.1% from 85.7% in May 2022.
3. The provisional deal inked by ALGT and TWU includes significant increases to wages, improvements to retirement benefits and other perks for flight attendants. However, the five-year deal will be effective only if it is successfully ratified. For that, it will be put to vote. The voting procedure is expected to take place later this month.
On a separate note, ALGT’s scheduled traffic (measured in revenue passenger miles) dropped 3% in May 2023 from the year-ago levels. Capacity for scheduled service decreased 2.2% from the May 2022 reading. With the traffic plunge outweighing capacity contraction, the load factor in May dropped 0.7 points to 85.9% from the year-ago period’s levels. For the total system (including scheduled service and fixed fee contract), Allegiant carried 3.3% less passengers in May 2023 from the year-ago period’s level.
4. In a bid to meet the anticipated demand swell in the winter season this year, Alaska Airlines management has decided to add three new routes to its network. Under its expansion plan, the carrier will start operating non-stop on the Portland-Miami, Palm Springs-New York JFK and San Luis Obispo-Las Vegas routes. While the daily year-round flights on the Portland-Miami route will take to the skies from Nov 17, flights on the other two routes will operate from Dec 14. Flights on the San Luis Obispo-Las Vegas route will operate daily. The Palm Springs-New York JFK route is seasonal.
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 all airline stocks traded in the green over the past week, resulting in the NYSE ARCA Airline Index gaining 6% to $74.06. Over the course of past six months, the NYSE ARCA Airline Index has appreciated 39%.
What’s Next in the Airline Space?
Stay tuned for the usual news updates in the space.