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Airline Stock Roundup: Profitable Q2 for JBLU, Wider-Than-Expected Loss for HA
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In the past week, JetBlue Airways (JBLU - Free Report) reported earnings for the second quarter of 2024 in contrast to expectations of a loss. The company’s efforts to cut costs bore fruit, resulting in unexpected profit. In a bid to cut costs, JBLU dropped some unprofitable routes. The company has also decided to delay shipments of 44 Airbus A321neo planes from 2025 to 2029, saving approximately $3 billion in capital outlay.
Hawaiian Holdings (HA - Free Report) incurred a wider-than-expected loss in the second quarter due to higher costs. The quarterly loss also widened on a year-over-year basis. Meanwhile, HA’s proposed merger with Alaska Air (ALK - Free Report) seems to have run into rough weather, with the United States Department of Justice or DOJ reportedly preparing to challenge or block the deal altogether. HA and ALK have agreed to extend the expiration of the review period from Aug 5 to Aug 15, 2024.
Allegiant Travel Company (ALGT - Free Report) reported better-than-expected earnings per share and revenues for second-quarter 2024. On a year-over-year basis, both earnings and revenues fell.
1 JetBlue reported second-quarter 2024 earnings (excluding one cent per share from non-recurring items) of 8 cents per share, in contrast to the Zacks Consensus Estimate of a loss of 13 cents. In the year-ago quarter, JBLU had reported earnings of 45 cents. Operating revenues of $2.43 billion beat the Zacks Consensus Estimate of $2.39 billion. However, the top line decreased 7% year over year.
JBLU expects capacity in the third quarter of 2024 to decline in the 3-6% band. CASM, excluding fuel and special items, is expected to climb 6-8%. Capital expenditures are expected to be roughly $365 million. Total revenues are forecast to decline in the range of 1.5-5.5%. The average fuel cost per gallon is estimated between $2.82 and $2.97.
2. Hawaiian Holdings’ second-quarter 2024 loss (excluding 7 cents from non-recurring items) of $1.37 per share was wider than the Zacks Consensus Estimate of a loss of $1.27. HA had incurred a loss of 47 cents per share in the year-ago quarter. Passenger revenues increased 3.3% year over year. The top line increased 3.5% to $731.9 million but fell short of the Zacks Consensus Estimate of $749.3 million.
For the third quarter of 2024, available seat miles or ASM are projected to increase 5.5-8.5% from third-quarter 2023 levels. Total revenues per available seat miles are anticipated to be down in the 1.5-4.5% range from the year-ago level. Costs per ASM (excluding fuel & non-recurring items) are expected to either decline by 1.5% or increase up to 1.5% from third-quarter 2023 numbers. Gallons of jet fuel consumed are expected to increase 3-6% from the third-quarter 2023 level. Adjusted fuel price per gallon is expected to be $2.71 in the third quarter of 2024.
ASMs are projected to increase in the 4-7% band for 2024. Costs per ASM (excluding fuel & non-recurring items) for 2024 are expected to rise 0.5-3.5% from 2023 actuals. Adjusted fuel price per gallon is expected to be $2.71 in the current year. Gallons of jet fuel consumed are expected to increase 2.5-5.5% from the 2023 level. Current-year capex is expected in the $350-$400 million range.
3 Allegiant’s second-quarter 2024 earnings of $1.77 per share beat Zacks Consensus Estimate of 84 cents but declined 59.3% year over year. Operating revenues of $666.3 million surpassed the Zacks Consensus Estimate of $659 million but decreased 2.6% on a year-over-year basis.
Passenger revenues, which accounted for the bulk (89.2%) of the top line, fell 7.5% on a year-over-year basis. Air traffic (measured in revenue passenger miles) for scheduled service fell 4% year over year in the quarter under review. Capacity (measured in available seat miles or ASMs) declined 1.6% from the year-ago number. Load factor (percentage of seats filled by passengers) declined to 84.7% from 86.9% in the reported quarter, as traffic decline was more than the capacity contraction.
For third-quarter 2024, ASM (for scheduled service) is expected to increase 1.3% on a year-over-year basis. Operating margin (excluding vendor outage) is expected to be between -1.5% and -3.5%. Loss per share (airline) is anticipated to be in the 75 cents-$1.75 range. Fuel cost per gallon is expected to be $2.80.
For 2024, ASM (for scheduled service) is now expected to increase 1.5% on a year-over-year basis. Interest expenses are forecast to be in the range of $130-$140 million. Under airline capex, aircraft, engines, induction costs and pre-delivery deposits are expected to be in the $180-200 million. Capitalized deferred heavy maintenance is envisioned to be between $80 million and $90 million. Other airline capital expenditures are expected to be between $120 and $130 million. The company now aims to end 2024 with a fleet size of 124 as opposed to 126 anticipated earlier.
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 most airline stocks traded in the red over the past week. The NYSE ARCA Airline Index decreased 1.1% to $54.58. Over the past six months, the NYSE ARCA Airline Index decreased by 10.7%.
What’s Next in the Airline Space?
Second-quarter 2024 earnings of Copa Holdings (CPA - Free Report) are scheduled to be announced on Aug 7. We expect the results of CPA to be aided by high passenger revenues, owing to upbeat air travel demand. However, high operating costs are likely to have dented its performance.
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Airline Stock Roundup: Profitable Q2 for JBLU, Wider-Than-Expected Loss for HA
In the past week, JetBlue Airways (JBLU - Free Report) reported earnings for the second quarter of 2024 in contrast to expectations of a loss. The company’s efforts to cut costs bore fruit, resulting in unexpected profit. In a bid to cut costs, JBLU dropped some unprofitable routes. The company has also decided to delay shipments of 44 Airbus A321neo planes from 2025 to 2029, saving approximately $3 billion in capital outlay.
Hawaiian Holdings (HA - Free Report) incurred a wider-than-expected loss in the second quarter due to higher costs. The quarterly loss also widened on a year-over-year basis. Meanwhile, HA’s proposed merger with Alaska Air (ALK - Free Report) seems to have run into rough weather, with the United States Department of Justice or DOJ reportedly preparing to challenge or block the deal altogether. HA and ALK have agreed to extend the expiration of the review period from Aug 5 to Aug 15, 2024.
Allegiant Travel Company (ALGT - Free Report) reported better-than-expected earnings per share and revenues for second-quarter 2024. On a year-over-year basis, both earnings and revenues fell.
Earnings-related updates were also provided in the previous week’s write-up.
Recap of the Recent Most Important Stories
1 JetBlue reported second-quarter 2024 earnings (excluding one cent per share from non-recurring items) of 8 cents per share, in contrast to the Zacks Consensus Estimate of a loss of 13 cents. In the year-ago quarter, JBLU had reported earnings of 45 cents. Operating revenues of $2.43 billion beat the Zacks Consensus Estimate of $2.39 billion. However, the top line decreased 7% year over year.
JBLU expects capacity in the third quarter of 2024 to decline in the 3-6% band. CASM, excluding fuel and special items, is expected to climb 6-8%. Capital expenditures are expected to be roughly $365 million. Total revenues are forecast to decline in the range of 1.5-5.5%. The average fuel cost per gallon is estimated between $2.82 and $2.97.
JBLU currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. Hawaiian Holdings’ second-quarter 2024 loss (excluding 7 cents from non-recurring items) of $1.37 per share was wider than the Zacks Consensus Estimate of a loss of $1.27. HA had incurred a loss of 47 cents per share in the year-ago quarter. Passenger revenues increased 3.3% year over year. The top line increased 3.5% to $731.9 million but fell short of the Zacks Consensus Estimate of $749.3 million.
For the third quarter of 2024, available seat miles or ASM are projected to increase 5.5-8.5% from third-quarter 2023 levels. Total revenues per available seat miles are anticipated to be down in the 1.5-4.5% range from the year-ago level. Costs per ASM (excluding fuel & non-recurring items) are expected to either decline by 1.5% or increase up to 1.5% from third-quarter 2023 numbers. Gallons of jet fuel consumed are expected to increase 3-6% from the third-quarter 2023 level. Adjusted fuel price per gallon is expected to be $2.71 in the third quarter of 2024.
ASMs are projected to increase in the 4-7% band for 2024. Costs per ASM (excluding fuel & non-recurring items) for 2024 are expected to rise 0.5-3.5% from 2023 actuals. Adjusted fuel price per gallon is expected to be $2.71 in the current year. Gallons of jet fuel consumed are expected to increase 2.5-5.5% from the 2023 level. Current-year capex is expected in the $350-$400 million range.
3 Allegiant’s second-quarter 2024 earnings of $1.77 per share beat Zacks Consensus Estimate of 84 cents but declined 59.3% year over year. Operating revenues of $666.3 million surpassed the Zacks Consensus Estimate of $659 million but decreased 2.6% on a year-over-year basis.
Passenger revenues, which accounted for the bulk (89.2%) of the top line, fell 7.5% on a year-over-year basis. Air traffic (measured in revenue passenger miles) for scheduled service fell 4% year over year in the quarter under review. Capacity (measured in available seat miles or ASMs) declined 1.6% from the year-ago number. Load factor (percentage of seats filled by passengers) declined to 84.7% from 86.9% in the reported quarter, as traffic decline was more than the capacity contraction.
For third-quarter 2024, ASM (for scheduled service) is expected to increase 1.3% on a year-over-year basis. Operating margin (excluding vendor outage) is expected to be between -1.5% and -3.5%. Loss per share (airline) is anticipated to be in the 75 cents-$1.75 range. Fuel cost per gallon is expected to be $2.80.
For 2024, ASM (for scheduled service) is now expected to increase 1.5% on a year-over-year basis. Interest expenses are forecast to be in the range of $130-$140 million. Under airline capex, aircraft, engines, induction costs and pre-delivery deposits are expected to be in the $180-200 million. Capitalized deferred heavy maintenance is envisioned to be between $80 million and $90 million. Other airline capital expenditures are expected to be between $120 and $130 million. The company now aims to end 2024 with a fleet size of 124 as opposed to 126 anticipated earlier.
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 most airline stocks traded in the red over the past week. The NYSE ARCA Airline Index decreased 1.1% to $54.58. Over the past six months, the NYSE ARCA Airline Index decreased by 10.7%.
What’s Next in the Airline Space?
Second-quarter 2024 earnings of Copa Holdings (CPA - Free Report) are scheduled to be announced on Aug 7. We expect the results of CPA to be aided by high passenger revenues, owing to upbeat air travel demand. However, high operating costs are likely to have dented its performance.