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In the past week, American Airlines (AAL - Free Report) , Southwest Airlines (LUV - Free Report) , and SkyWest (SKYW - Free Report) reported better-than-expected earnings per share for the second quarter of 2024. While SkyWest and Southwest Airlines reported higher-than-expected revenues, American Airlines fell shy of estimates. European carrier Ryanair Holdings (RYAAY - Free Report) reported lower-than-expected earnings per share as well as revenues for first-quarter fiscal 2025 (ended Jun 30, 2024). Earnings-related updates were also provided in the previous week’s write-up.
JetBlue Airways (JBLU - Free Report) was also in the news courtesy of its decision to add 20% more seats in New England this winter.
Recap of the Recent Most Important Stories
1 American Airlines’ second-quarter 2024 earnings (excluding 8 cents from non-recurring items) of $1.09 per share beat the Zacks Consensus Estimate of $1.04. In the year-ago quarter, AAL reported earnings of $1.92 per share. The year-over-year bottom-line contraction was mainly due to high costs. Operating revenues of $14.33 billion fell short of the Zacks Consensus Estimate of $14.42 billion but increased 2% year over year. The airline trimmed its earnings per share forecast for full-year 2024, citing pricing pressure with excess capacity characterizing certain markets. This phenomenon dampened American Airlines’ pricing power. AAL’s management now expects current-year adjusted earnings per share in the 70 cents-$1.30 range (earlier expectation was in the range of $2.25-$3.25 per share).
2. Southwest Airlines reported second-quarter 2024 earnings of 58 cents per share, which outpaced the Zacks Consensus Estimate of 50 cents but declined 46.7% from the year-ago reported quarter. Revenues of $7.35 billion surpassed the Zacks Consensus Estimate of $7.32 billion and improved 4.5% year over year. The year over year uptick in revenues was owing to solid demand trends and higher passenger and ancillary revenues. Further, managed business revenues continued to improve on a year-over-year basis. For the third quarter of 2024, Available Seat Miles (a measure of capacity) are estimated to improve by 2% from the year-ago reported figure. Economic fuel costs per gallon are expected to be in the range of $2.60-$2.70.
3 Ryanair’s first-quarter fiscal 2025 earnings of $1.69 per share lagged the Zacks Consensus Estimate of $2.89 and declined 46.3% year over year. Revenues of $3.9 billion missed the Zacks Consensus Estimate of $4.3 billion and declined 1.7% year over year. Ryanair now expects fares in the second quarter to be “materially lower than last summer” after previously anticipating them "to be flat to modestly up."
4. In a bid to expand its network, JBLU has decided to bolster its presence across New England by adding 20% more seats in the region by this winter. The new routes are aimed at enhancing the connectivity for New Englanders. As part of its expansion move, JBLU intends to add more flights at Boston Logan International Airport and other New England airports apart from providing service for the first time from Manchester-Boston Regional Airport in Manchester, New Hampshire.
5. SkyWest reported second-quarter 2024 earnings of $1.82 per share, which beat the Zacks Consensus Estimate of $1.73. The company reported earnings of 35 cents per share for the second quarter of 2023. Revenues of $867.1 million surpassed the Zacks Consensus Estimate of $814.4 million. The top line grew 19.5% year over year due to higher revenues from flying agreements.
Operating expenses shot up 8% year over year to $747 million in the second quarter of 2024, primarily driven by the 12% increase in block hour production year-over-year. SKYW exited the quarter with cash and cash equivalents of $834 million, down marginally from $835 million at the December-end quarter of 2023. Total debt in the second quarter of 2024 was $2.8 billion, down from $3 billion in the fourth quarter of 2023.
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 $54.20. Over the past six months, the NYSE ARCA Airline Index decreased 13.2%.
What’s Next in the Airline Space?
JetBlue is due to report second-quarter 2024 earnings on Jul 30.
We expect JBLU’s results 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.
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Airline Stock Roundup: AAL, LUV & SKYW Beat on Q2 Earnings, JBLU Expands Network
In the past week, American Airlines (AAL - Free Report) , Southwest Airlines (LUV - Free Report) , and SkyWest (SKYW - Free Report) reported better-than-expected earnings per share for the second quarter of 2024. While SkyWest and Southwest Airlines reported higher-than-expected revenues, American Airlines fell shy of estimates. European carrier Ryanair Holdings (RYAAY - Free Report) reported lower-than-expected earnings per share as well as revenues for first-quarter fiscal 2025 (ended Jun 30, 2024). Earnings-related updates were also provided in the previous week’s write-up.
JetBlue Airways (JBLU - Free Report) was also in the news courtesy of its decision to add 20% more seats in New England this winter.
Recap of the Recent Most Important Stories
1 American Airlines’ second-quarter 2024 earnings (excluding 8 cents from non-recurring items) of $1.09 per share beat the Zacks Consensus Estimate of $1.04. In the year-ago quarter, AAL reported earnings of $1.92 per share. The year-over-year bottom-line contraction was mainly due to high costs. Operating revenues of $14.33 billion fell short of the Zacks Consensus Estimate of $14.42 billion but increased 2% year over year. The airline trimmed its earnings per share forecast for full-year 2024, citing pricing pressure with excess capacity characterizing certain markets. This phenomenon dampened American Airlines’ pricing power. AAL’s management now expects current-year adjusted earnings per share in the 70 cents-$1.30 range (earlier expectation was in the range of $2.25-$3.25 per share).
2. Southwest Airlines reported second-quarter 2024 earnings of 58 cents per share, which outpaced the Zacks Consensus Estimate of 50 cents but declined 46.7% from the year-ago reported quarter. Revenues of $7.35 billion surpassed the Zacks Consensus Estimate of $7.32 billion and improved 4.5% year over year. The year over year uptick in revenues was owing to solid demand trends and higher passenger and ancillary revenues. Further, managed business revenues continued to improve on a year-over-year basis. For the third quarter of 2024, Available Seat Miles (a measure of capacity) are estimated to improve by 2% from the year-ago reported figure. Economic fuel costs per gallon are expected to be in the range of $2.60-$2.70.
3 Ryanair’s first-quarter fiscal 2025 earnings of $1.69 per share lagged the Zacks Consensus Estimate of $2.89 and declined 46.3% year over year. Revenues of $3.9 billion missed the Zacks Consensus Estimate of $4.3 billion and declined 1.7% year over year. Ryanair now expects fares in the second quarter to be “materially lower than last summer” after previously anticipating them "to be flat to modestly up."
4. In a bid to expand its network, JBLU has decided to bolster its presence across New England by adding 20% more seats in the region by this winter. The new routes are aimed at enhancing the connectivity for New Englanders. As part of its expansion move, JBLU intends to add more flights at Boston Logan International Airport and other New England airports apart from providing service for the first time from Manchester-Boston Regional Airport in Manchester, New Hampshire.
5. SkyWest reported second-quarter 2024 earnings of $1.82 per share, which beat the Zacks Consensus Estimate of $1.73. The company reported earnings of 35 cents per share for the second quarter of 2023. Revenues of $867.1 million surpassed the Zacks Consensus Estimate of $814.4 million. The top line grew 19.5% year over year due to higher revenues from flying agreements.
Operating expenses shot up 8% year over year to $747 million in the second quarter of 2024, primarily driven by the 12% increase in block hour production year-over-year. SKYW exited the quarter with cash and cash equivalents of $834 million, down marginally from $835 million at the December-end quarter of 2023. Total debt in the second quarter of 2024 was $2.8 billion, down from $3 billion in the fourth quarter of 2023.
SKYW currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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 $54.20. Over the past six months, the NYSE ARCA Airline Index decreased 13.2%.
What’s Next in the Airline Space?
JetBlue is due to report second-quarter 2024 earnings on Jul 30.
We expect JBLU’s results 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.