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Airline Stock Roundup: AAL's Deal With ZeroAvia, RYAAY's Upbeat June Traffic
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In the past week, American Airlines (AAL - Free Report) inked a deal to buy 100 hydrogen-electric engines from aviation startup ZeroAvia conditionally. Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group (ALK - Free Report) , intends to operate two daily nonstop flights from Los Angeles to Mexico this winter.
Driven by upbeat passenger volumes, Ryanair Holdings (RYAAY - Free Report) reported impressive traffic numbers for June. In a bid to defeat activist firm Elliott Investment Management’s intention of bringing about a change in leadership, Southwest Airlines (LUV - Free Report) has adopted a shareholder rights plan.
Recap of the Recent Most Important Stories
1 In June, 19.3 million passengers were transported on Ryanair flights, reflecting an 11% year-over-year increase. RYAAY’s traffic in June was higher than the readings in March, April and May of 13.6 million, 17.3 million, and 18.6 million, respectively. The June load factor (percentage of seats filled by passengers) of 95% remained flat sequentially as well as on a year-over-year basis. The figure was higher than the load factor of 92% reported in April 2024 and 93% reported in March 2024.
2. With Elliott Investment Management building a stake of nearly $2 billion or nearly 11% in Southwest Airlines, the company adopted a “poison pill” or shareholder rights plan. Such plans allow existing shareholders to buy shares at a discounted rate to discourage a takeover by an outsider (Elliott in this case). LUV’s plan would come into effect as and when a shareholder acquires 12.5% or more of its common stock. Such a scenario would allow all other shareholders to purchase the stock at a 50% discount.
LUV was in the news recently when its management trimmed its second-quarter guidance for unit revenues due to a change in booking patterns.The story was covered in detail in the previous week’s write-up.
3 Alaska Airlines announced the launch of daily nonstop flights from Los Angeles International Airport to La Paz and Monterrey in Mexico this winter. Flights from Los Angeles to La Paz will start from Nov 20, 2024, two or three times a week. Daily flights from Los Angeles to Monterrey, Mexico's second-largest metro area, will begin from Feb 13, 2025. The decision to launch new routes to two vibrant Mexican destinations is likely to help ALK generate more revenues by attracting significant traffic.
4. In an environmentally friendly move, American Airlines entered into a conditional purchase agreement with ZeroAvia for 100 hydrogen-electric engines. The engines would be used to power the jets used in its regional routes. AAL also increased its investment in ZeroAvia as part of its Series C financing round. AAL first invested and signed a memorandum of understanding with ZeroAvia in 2022. AAL aims to achieve net-zero greenhouse gas emissions by 2050.
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 airline stocks exhibited a mixed trend with respect to price over the past week. The NYSE ARCA Airline Index remained flat at $56.44. Over the past six months, the NYSE ARCA Airline Index has decreased 10.9%.
What’s Next in the Airline Space?
With air travel demand expected to soar through the roof this summer, we expect airlines to boost capacity to meet the anticipated demand swell. Updates on that front cannot be ruled out in the coming days. Traffic-related updates for the month of June are also expected.
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Airline Stock Roundup: AAL's Deal With ZeroAvia, RYAAY's Upbeat June Traffic
In the past week, American Airlines (AAL - Free Report) inked a deal to buy 100 hydrogen-electric engines from aviation startup ZeroAvia conditionally. Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group (ALK - Free Report) , intends to operate two daily nonstop flights from Los Angeles to Mexico this winter.
Driven by upbeat passenger volumes, Ryanair Holdings (RYAAY - Free Report) reported impressive traffic numbers for June. In a bid to defeat activist firm Elliott Investment Management’s intention of bringing about a change in leadership, Southwest Airlines (LUV - Free Report) has adopted a shareholder rights plan.
Recap of the Recent Most Important Stories
1 In June, 19.3 million passengers were transported on Ryanair flights, reflecting an 11% year-over-year increase. RYAAY’s traffic in June was higher than the readings in March, April and May of 13.6 million, 17.3 million, and 18.6 million, respectively. The June load factor (percentage of seats filled by passengers) of 95% remained flat sequentially as well as on a year-over-year basis. The figure was higher than the load factor of 92% reported in April 2024 and 93% reported in March 2024.
RYAAY currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. With Elliott Investment Management building a stake of nearly $2 billion or nearly 11% in Southwest Airlines, the company adopted a “poison pill” or shareholder rights plan. Such plans allow existing shareholders to buy shares at a discounted rate to discourage a takeover by an outsider (Elliott in this case). LUV’s plan would come into effect as and when a shareholder acquires 12.5% or more of its common stock. Such a scenario would allow all other shareholders to purchase the stock at a 50% discount.
LUV was in the news recently when its management trimmed its second-quarter guidance for unit revenues due to a change in booking patterns.The story was covered in detail in the previous week’s write-up.
3 Alaska Airlines announced the launch of daily nonstop flights from Los Angeles International Airport to La Paz and Monterrey in Mexico this winter. Flights from Los Angeles to La Paz will start from Nov 20, 2024, two or three times a week. Daily flights from Los Angeles to Monterrey, Mexico's second-largest metro area, will begin from Feb 13, 2025. The decision to launch new routes to two vibrant Mexican destinations is likely to help ALK generate more revenues by attracting significant traffic.
4. In an environmentally friendly move, American Airlines entered into a conditional purchase agreement with ZeroAvia for 100 hydrogen-electric engines. The engines would be used to power the jets used in its regional routes. AAL also increased its investment in ZeroAvia as part of its Series C financing round. AAL first invested and signed a memorandum of understanding with ZeroAvia in 2022. AAL aims to achieve net-zero greenhouse gas emissions by 2050.
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 airline stocks exhibited a mixed trend with respect to price over the past week. The NYSE ARCA Airline Index remained flat at $56.44. Over the past six months, the NYSE ARCA Airline Index has decreased 10.9%.
What’s Next in the Airline Space?
With air travel demand expected to soar through the roof this summer, we expect airlines to boost capacity to meet the anticipated demand swell. Updates on that front cannot be ruled out in the coming days. Traffic-related updates for the month of June are also expected.