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Airline Stocks Reports July Traffic Numbers: An Analysis
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The Zacks Airline industry has been benefiting from buoyant air travel demand, both on the domestic as well as international front. Upbeat passenger volumes have always been acting as a tailwind. Higher bookings contribute to the airlines’ top-line performance. While air travel demand is particularly strong on the leisure front, business travel has also made an encouraging comeback.
Partly due to these tailwinds, we believe the Zacks Airline industry has risen 13.5% so far this year, outperforming the 2.9% decline of the broader Zacks Transportation sector.
Image Source: Zacks Investment Research
On the flip side, the prospects of the industry players are dented by high labor costs. With U.S. airlines grappling with a labor shortage in the post-COVID high-demand scenario, the bargaining power of various labor groups has naturally increased. As a result, we have seen pay-hike deals being inked in the space. This is resulting in a spike in labor costs.
For example, at United Airlines (UAL - Free Report) , consolidated cost per available seat mile, excluding fuel, third-party business expenses, profit-sharing and special charges, increased 2.1% year over year in the second quarter of 2024. Southwest Airlines Co. (LUV - Free Report) ) consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items increased 6% year over year in second-quarter 2024.
Moreover, production delays at Boeing (BA) are hurting the fleet-related plans of airlines in the United States. Weak pricing power also remains an overhang.
Given this backdrop, let’s take a look at the July 2024 traffic reports issued by Copa Holdings (CPA - Free Report) , Ryanair Holdings (RYAAY - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
July 2024 Traffic Reports: CPA, RYAAY & ALGT
Driven by high passenger volumes, Copa Holdings’ revenue passenger miles (a measure of traffic) rose in double digits in July on a year-over-year basis. To match the demand swell, CPA is increasing its capacity. In July, available seat miles (a measure of capacity) increased 11.3% year over year. Revenue passenger miles increased 9.5% year over year. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor (percentage of seats filled by passengers) fell to 87.6% from 89% in July 2023.
Upbeat air travel demand has been aiding Copa Holdings' revenues. Management expects the current-year load factor (percentage of seats filled by passengers) to be 86.5%, assuming that the rosy traffic scenario continues. For 2024, the company expects consolidated capacity or available seat miles to register 9% growth year over year. Operating margin is projected in the 21-23% band. CPA presently carries a Zacks Rank #4 (Sell).
Ryanair, a European carrier, also reported solid traffic numbers for July 2024, driven by upbeat air travel demand. RYAAY presently carries a Zacks Rank # 5 (Strong Sell).
The number of passengers transported on Ryanair flights was 20.2 million in July 2024, reflecting an 8% year-over-year increase. RYAAY’s traffic in July was much more than the June reading of 19.3 million, the May reading of 18.9 million, the April reading of 17.3 million and the March reading of 13.6 million.
The July load factor (percentage of seats filled by passengers) of 96% remained flat on a year-over-year basis. The figure was higher than the load factor of 95% reported in June as well as May, 92% reported in April 2024 and 93% reported in March 2024.
Notably, RYAAY operated more than 110,500 flights in July 2024. This marks an improvement from 106,000 flights operated in June 2024, 105,000 flights in May 2024, 98,400 flights in April 2024 and 77,000 flights in March 2024. However, almost 651 flights got canceled due to the ATC (air traffic control) delays.
Allegiant, a Zacks Rank #3 (Hold) stock, reported disappointing traffic numbers for July 2024.
Scheduled traffic (measured in revenue passenger miles) fell 1.7% from the July 2023 levels. Capacity (measured in available seat miles) for scheduled service grew 2.4% year over year. As traffic failed to outpace capacity expansion, the load factor (percentage of seats filled by passengers) in July 2024 declined to 87.5% from 91.2% a year ago.
Total departures (scheduled services) improved 2.7% in July 2024 from a year ago. Moreover, its average stage length (miles) grew 0.3% year over year.
For the total system (including scheduled service and fixed fee contract), Allegiant carried 1.8% less passengers in July 2024 from the year-ago level. System-wide capacity expanded 3.2% in July 2024 on a year-over-year basis.
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Airline Stocks Reports July Traffic Numbers: An Analysis
The Zacks Airline industry has been benefiting from buoyant air travel demand, both on the domestic as well as international front. Upbeat passenger volumes have always been acting as a tailwind. Higher bookings contribute to the airlines’ top-line performance. While air travel demand is particularly strong on the leisure front, business travel has also made an encouraging comeback.
Partly due to these tailwinds, we believe the Zacks Airline industry has risen 13.5% so far this year, outperforming the 2.9% decline of the broader Zacks Transportation sector.
Image Source: Zacks Investment Research
On the flip side, the prospects of the industry players are dented by high labor costs. With U.S. airlines grappling with a labor shortage in the post-COVID high-demand scenario, the bargaining power of various labor groups has naturally increased. As a result, we have seen pay-hike deals being inked in the space. This is resulting in a spike in labor costs.
For example, at United Airlines (UAL - Free Report) , consolidated cost per available seat mile, excluding fuel, third-party business expenses, profit-sharing and special charges, increased 2.1% year over year in the second quarter of 2024. Southwest Airlines Co. (LUV - Free Report) ) consolidated unit cost or cost per available seat mile (CASM) excluding fuel, oil and profit-sharing expenses, and special items increased 6% year over year in second-quarter 2024.
Moreover, production delays at Boeing (BA) are hurting the fleet-related plans of airlines in the United States. Weak pricing power also remains an overhang.
Given this backdrop, let’s take a look at the July 2024 traffic reports issued by Copa Holdings (CPA - Free Report) , Ryanair Holdings (RYAAY - Free Report) and Allegiant Travel Company (ALGT - Free Report) .
July 2024 Traffic Reports: CPA, RYAAY & ALGT
Driven by high passenger volumes, Copa Holdings’ revenue passenger miles (a measure of traffic) rose in double digits in July on a year-over-year basis. To match the demand swell, CPA is increasing its capacity. In July, available seat miles (a measure of capacity) increased 11.3% year over year. Revenue passenger miles increased 9.5% year over year. Although traffic improved on a year-over-year basis, it failed to outpace capacity expansion. As a result, the load factor (percentage of seats filled by passengers) fell to 87.6% from 89% in July 2023.
Upbeat air travel demand has been aiding Copa Holdings' revenues. Management expects the current-year load factor (percentage of seats filled by passengers) to be 86.5%, assuming that the rosy traffic scenario continues. For 2024, the company expects consolidated capacity or available seat miles to register 9% growth year over year. Operating margin is projected in the 21-23% band. CPA presently carries a Zacks Rank #4 (Sell).
Ryanair, a European carrier, also reported solid traffic numbers for July 2024, driven by upbeat air travel demand. RYAAY presently carries a Zacks Rank # 5 (Strong Sell).
The number of passengers transported on Ryanair flights was 20.2 million in July 2024, reflecting an 8% year-over-year increase. RYAAY’s traffic in July was much more than the June reading of 19.3 million, the May reading of 18.9 million, the April reading of 17.3 million and the March reading of 13.6 million.
The July load factor (percentage of seats filled by passengers) of 96% remained flat on a year-over-year basis. The figure was higher than the load factor of 95% reported in June as well as May, 92% reported in April 2024 and 93% reported in March 2024.
Notably, RYAAY operated more than 110,500 flights in July 2024. This marks an improvement from 106,000 flights operated in June 2024, 105,000 flights in May 2024, 98,400 flights in April 2024 and 77,000 flights in March 2024. However, almost 651 flights got canceled due to the ATC (air traffic control) delays.
Allegiant, a Zacks Rank #3 (Hold) stock, reported disappointing traffic numbers for July 2024.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Scheduled traffic (measured in revenue passenger miles) fell 1.7% from the July 2023 levels. Capacity (measured in available seat miles) for scheduled service grew 2.4% year over year. As traffic failed to outpace capacity expansion, the load factor (percentage of seats filled by passengers) in July 2024 declined to 87.5% from 91.2% a year ago.
Total departures (scheduled services) improved 2.7% in July 2024 from a year ago. Moreover, its average stage length (miles) grew 0.3% year over year.
For the total system (including scheduled service and fixed fee contract), Allegiant carried 1.8% less passengers in July 2024 from the year-ago level. System-wide capacity expanded 3.2% in July 2024 on a year-over-year basis.