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The Zacks Analyst Blog United Airlines, Alaska Air, Spirit Airlines, Delta Air and American Airlines
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For Immediate Releases
Chicago, IL – July 19, 2024 – 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: United Airlines (UAL - Free Report) , Alaska Air Group (ALK - Free Report) , Spirit Airlines (SAVE - Free Report) , Delta Air Lines (DAL - Free Report) and American Airlines (AAL - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Airline Stock Roundup: Q2 Beats with More to Come
In the past week, airline heavyweights United Airlines and Alaska Air Group reported second-quarter 2024 results. Both companies posted better-than-expected earnings per share (EPS). However, both carriers offered below-par guidance for the third quarter of 2024 due to ticket price cuts to attract domestic travelers.
Spirit Airlines expects the adjusted loss and revenues for the second quarter to be worse than that expected previously due to lackluster non-ticket income. Delta Air Lines was also featured in the news, courtesy of a rating upgrade secured from Fitch Ratings. On Jul 11, Delta kick-started the second-quarter earnings season for airlines. DAL’s earnings report was discussed in detail in the previous week’s write-up.
Recap of the Latest Top Stories
1 United Airlines reported second-quarter 2024 EPS (excluding 18 cents from non-recurring items) of $4.14, which surpassed the Zacks Consensus Estimate of $3.97. Earnings decreased 17.7% on a year-over-year basis. Operating revenues of $14.98 billion missed the Zacks Consensus Estimate of $15.13 billion.
The top line increased 5.7% year over year due to upbeat air travel demand. Management expects third-quarter 2024 earnings of $2.75-$3.25 per share. The mid-point of the guided range is below the Zacks Consensus Estimate of $3.61. Like DAL last week, UAL’s management stated that the practice of price cuts by low-cost carriers, as they struggle to fill the excess seats this summer, is hurting even bigger rivals like UAL.
Discount carriers have added too many seats that they are now attempting to fill by lowering fares and compelling airline majors to do the same in a bid to stay competitive. For 2024, adjusted EPS are expected between $9 and $11. The mid-point of the guided range is above the Zacks Consensus Estimate of $9.75.
2. Alaska Air reported second-quarter 2024 EPS(excluding 84 cents from non-recurring items) of $2.55, which surpassed the Zacks Consensus Estimate of $2.36. Earnings decreased 15% on a year-over-year basis. Operating revenues of $2.89 billion lagged the Zacks Consensus Estimate of $2.95 billion.
The top line increased 2% year over year due to higher passenger revenues. ALK anticipates third-quarter 2024 EPS between $1.40 and $1.60. The mid-point of the guided range is below the Zacks Consensus Estimate of $2.19. For 2024, adjusted EPS are expected between $3.50 and $4.50. The mid-point of the guided range is below the Zacks Consensus Estimate of $4.55.
3. Spirit Airlines expects revenues of $1.28 billion for second-quarter 2024. The new guidance is below the mid-point of the previously mentioned $1.32-$1.34 billion. The adjusted operating margin is expected between (13.5%) and (12.5%) compared with the earlier mentioned (9%)-(11%). The adjusted operating loss is expected to be $160-$173 million compared with the previously mentioned $121-$145 million.
4 Fitch Ratings upgraded Delta’s credit rating to investment grade, owing to the airline company’s financial performance and upbeat demand for air travel, apart from the airline’s debt-reduction efforts. Delta was upgraded to “BBB-”, which is an investment-grade rating. Fitch Ratings is one of three major agencies to evaluate and assign ratings to companies based on financial metrics.
Performance
Most airline stocks have traded in the green over the past week. The NYSE ARCA Airline Index gained 1.6% to $56.5 over the past five trading days. Over the past six months, the NYSE ARCA Airline Index has declined 5%.
What's Next in the Airline Space?
Second-quarter 2024 earnings results from American Airlines are expected on Jul 25.
We expect the results of AAL to be aided by high passenger revenues, owing to upbeat air travel demand. With the summer season partially falling in the second quarter, buoyant air travel demand in the summer holiday period is likely to have boosted the company’s top line in the quarter under review. However, high labor costs are likely to have dented its performance. Like its peers, discounting pressure at the low end of the market may have hurt AAL’s pricing power, in turn impacting its performance.
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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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The Zacks Analyst Blog United Airlines, Alaska Air, Spirit Airlines, Delta Air and American Airlines
For Immediate Releases
Chicago, IL – July 19, 2024 – 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: United Airlines (UAL - Free Report) , Alaska Air Group (ALK - Free Report) , Spirit Airlines (SAVE - Free Report) , Delta Air Lines (DAL - Free Report) and American Airlines (AAL - Free Report) .
Here are highlights from Friday’s Analyst Blog:
Airline Stock Roundup: Q2 Beats with More to Come
In the past week, airline heavyweights United Airlines and Alaska Air Group reported second-quarter 2024 results. Both companies posted better-than-expected earnings per share (EPS). However, both carriers offered below-par guidance for the third quarter of 2024 due to ticket price cuts to attract domestic travelers.
Spirit Airlines expects the adjusted loss and revenues for the second quarter to be worse than that expected previously due to lackluster non-ticket income. Delta Air Lines was also featured in the news, courtesy of a rating upgrade secured from Fitch Ratings. On Jul 11, Delta kick-started the second-quarter earnings season for airlines. DAL’s earnings report was discussed in detail in the previous week’s write-up.
Recap of the Latest Top Stories
1 United Airlines reported second-quarter 2024 EPS (excluding 18 cents from non-recurring items) of $4.14, which surpassed the Zacks Consensus Estimate of $3.97. Earnings decreased 17.7% on a year-over-year basis. Operating revenues of $14.98 billion missed the Zacks Consensus Estimate of $15.13 billion.
The top line increased 5.7% year over year due to upbeat air travel demand. Management expects third-quarter 2024 earnings of $2.75-$3.25 per share. The mid-point of the guided range is below the Zacks Consensus Estimate of $3.61. Like DAL last week, UAL’s management stated that the practice of price cuts by low-cost carriers, as they struggle to fill the excess seats this summer, is hurting even bigger rivals like UAL.
Discount carriers have added too many seats that they are now attempting to fill by lowering fares and compelling airline majors to do the same in a bid to stay competitive. For 2024, adjusted EPS are expected between $9 and $11. The mid-point of the guided range is above the Zacks Consensus Estimate of $9.75.
2. Alaska Air reported second-quarter 2024 EPS(excluding 84 cents from non-recurring items) of $2.55, which surpassed the Zacks Consensus Estimate of $2.36. Earnings decreased 15% on a year-over-year basis. Operating revenues of $2.89 billion lagged the Zacks Consensus Estimate of $2.95 billion.
The top line increased 2% year over year due to higher passenger revenues. ALK anticipates third-quarter 2024 EPS between $1.40 and $1.60. The mid-point of the guided range is below the Zacks Consensus Estimate of $2.19. For 2024, adjusted EPS are expected between $3.50 and $4.50. The mid-point of the guided range is below the Zacks Consensus Estimate of $4.55.
Currently, ALK carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
3. Spirit Airlines expects revenues of $1.28 billion for second-quarter 2024. The new guidance is below the mid-point of the previously mentioned $1.32-$1.34 billion. The adjusted operating margin is expected between (13.5%) and (12.5%) compared with the earlier mentioned (9%)-(11%). The adjusted operating loss is expected to be $160-$173 million compared with the previously mentioned $121-$145 million.
4 Fitch Ratings upgraded Delta’s credit rating to investment grade, owing to the airline company’s financial performance and upbeat demand for air travel, apart from the airline’s debt-reduction efforts. Delta was upgraded to “BBB-”, which is an investment-grade rating. Fitch Ratings is one of three major agencies to evaluate and assign ratings to companies based on financial metrics.
Performance
Most airline stocks have traded in the green over the past week. The NYSE ARCA Airline Index gained 1.6% to $56.5 over the past five trading days. Over the past six months, the NYSE ARCA Airline Index has declined 5%.
What's Next in the Airline Space?
Second-quarter 2024 earnings results from American Airlines are expected on Jul 25.
We expect the results of AAL to be aided by high passenger revenues, owing to upbeat air travel demand. With the summer season partially falling in the second quarter, buoyant air travel demand in the summer holiday period is likely to have boosted the company’s top line in the quarter under review. However, high labor costs are likely to have dented its performance. Like its peers, discounting pressure at the low end of the market may have hurt AAL’s pricing power, in turn impacting its performance.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +7.0 average gain per year. Amazingly, they soared with average gains of +44.9%, +48.4% 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.