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The Zacks Analyst Blog Highlights American Airlines, Allegiant Travel's, JetBlue Airways and Spirit Airlines
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For Immediate Release
Chicago, IL – August 28, 2023 – 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: American Airlines (AAL - Free Report) , Allegiant Travel's (ALGT - Free Report) , JetBlue Airways (JBLU - Free Report) and Spirit Airlines (SAVE - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Airline Stocks Roundup: American, Allegiant & More
In the past week, American Airlines received encouraging tidings on the labor front when the company's pilots, represented by Allied Pilots Association or APA, approved a four-year deal pertaining to wage increase. Due to the pay increase, management expects labor costs to increase in third-quarter 2023.
Meanwhile, Allegiant Travel's traffic report for the month of July was impressive owing to the post-pandemic surge in air-travel demand. Driven by high passenger volumes, load factor (percentage of seats filled by passengers) in July inched up 0.7 points to 91.2% from the year-ago quarter.
1. The approval of the tentative agreement makes AAL's pilots eligible for an immediate pay raise in excess of 21% on average. Also, the deal includes provisions aimed at improving pilots' quality of life. The approval implies that company contributions to retirement plans will increase. The contract becomes amendable on Aug 1, 2027 and includes a provision that the next round of bargaining can begin as soon as November 2026. The four-year contract boosts the overall compensation of AAL pilots by more than 46% over its duration and is valued at $9.6 billion.
The deal has provisions for retroactive pay for the first four months of 2023. This implies that $230 million will get reflected as additional expenses in the September-quarter results. Including the expenditures associated with the deal, American Airlines now expects third-quarter cost per available seat mile excluding fuel and net special items or CASM-ex to rise in the 4-6% band on a year-over-year basis (prior guidance: 2-4% year-over-year jump).
2. In July, scheduled traffic (measured in revenue passenger miles) at ALGT was flat compared with July 2022 levels. Capacity (measured in available seat miles) for scheduled service also decreased marginally from the July 2022 reading. For the total system (including scheduled service and fixed fee contract), Allegiant carried more passengers in July 2023 from the year-ago period's level. Total departures (scheduled services) increased 3.2% in July 2023 from its year-ago levels. Fuel price per gallon in July is estimated to have been $2.77 compared with $2.64 in June.
3. JetBlue Airwaysreportedly aims to hike fares on Spirit Airlines' flights by as much as 40% if the $3.8 billion deal materializes. JBLU intends to do away with 24 seats on an average from each of SAVE's roughly 200 planes to reduce capacity and increase prices. The disclosure may jeopardize the chances of the deal, which was announced in July 2022, going through. The Justice Department is already challenging the deal with a trial expected to commence in October.
The majority of airline stocks traded in the red in the past week. The NYSE ARCA Airline Index declined 1% over the period to $61.22. Over the course of the past six months, the sector tracker has increased 1.8%.
What's Next in the Airline Space?
Stay tuned for the usual news updates in the space.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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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The Zacks Analyst Blog Highlights American Airlines, Allegiant Travel's, JetBlue Airways and Spirit Airlines
For Immediate Release
Chicago, IL – August 28, 2023 – 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: American Airlines (AAL - Free Report) , Allegiant Travel's (ALGT - Free Report) , JetBlue Airways (JBLU - Free Report) and Spirit Airlines (SAVE - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Airline Stocks Roundup: American, Allegiant & More
In the past week, American Airlines received encouraging tidings on the labor front when the company's pilots, represented by Allied Pilots Association or APA, approved a four-year deal pertaining to wage increase. Due to the pay increase, management expects labor costs to increase in third-quarter 2023.
Meanwhile, Allegiant Travel's traffic report for the month of July was impressive owing to the post-pandemic surge in air-travel demand. Driven by high passenger volumes, load factor (percentage of seats filled by passengers) in July inched up 0.7 points to 91.2% from the year-ago quarter.
Read the last Airline Roundup here.
Recap of the Past Week's Most Important Stories
1. The approval of the tentative agreement makes AAL's pilots eligible for an immediate pay raise in excess of 21% on average. Also, the deal includes provisions aimed at improving pilots' quality of life. The approval implies that company contributions to retirement plans will increase. The contract becomes amendable on Aug 1, 2027 and includes a provision that the next round of bargaining can begin as soon as November 2026. The four-year contract boosts the overall compensation of AAL pilots by more than 46% over its duration and is valued at $9.6 billion.
The deal has provisions for retroactive pay for the first four months of 2023. This implies that $230 million will get reflected as additional expenses in the September-quarter results. Including the expenditures associated with the deal, American Airlines now expects third-quarter cost per available seat mile excluding fuel and net special items or CASM-ex to rise in the 4-6% band on a year-over-year basis (prior guidance: 2-4% year-over-year jump).
2. In July, scheduled traffic (measured in revenue passenger miles) at ALGT was flat compared with July 2022 levels. Capacity (measured in available seat miles) for scheduled service also decreased marginally from the July 2022 reading. For the total system (including scheduled service and fixed fee contract), Allegiant carried more passengers in July 2023 from the year-ago period's level. Total departures (scheduled services) increased 3.2% in July 2023 from its year-ago levels. Fuel price per gallon in July is estimated to have been $2.77 compared with $2.64 in June.
3. JetBlue Airways reportedly aims to hike fares on Spirit Airlines' flights by as much as 40% if the $3.8 billion deal materializes. JBLU intends to do away with 24 seats on an average from each of SAVE's roughly 200 planes to reduce capacity and increase prices. The disclosure may jeopardize the chances of the deal, which was announced in July 2022, going through. The Justice Department is already challenging the deal with a trial expected to commence in October.
Currently, JBLU carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Price Performance
The majority of airline stocks traded in the red in the past week. The NYSE ARCA Airline Index declined 1% over the period to $61.22. Over the course of the past six months, the sector tracker has increased 1.8%.
What's Next in the Airline Space?
Stay tuned for the usual news updates in the space.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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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.