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Low Fuel Costs & Rosy Travel Demand Likely to Aid Airlines' Q3 Results
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The third-quarter 2024 earnings cycle is scheduled to start shortly for players in the Zacks Airline industry, with Atlanta, GA-based airline heavyweight Delta Air Lines (DAL - Free Report) slated to release its results on Oct. 10, 2024, before market open. Airlines are expected to perform well in the September quarter, driven by increased passenger volumes and declining fuel costs.
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.
Further, the decline in expenses on fuel represents another tailwind for the industry. Notably, oil prices declined 14% in the July-September period. As fuel expenses represent a key input cost for any transportation player, a decline in oil prices bodes well for the bottom-line growth of airline stocks.
Backed by these tailwinds mentioned above, the industry has had a solid run on the bourse over the past three months. The Zacks Airline industry has risen 12.6% in the past three months, outperforming 4.6% growth of the broader Zacks Transportation sector and a 4% rise of the Zacks S&P 500 Composite.
Three-Month Price Comparison
Image Source: Zacks Investment Research
The buoyancy in the industry is further confirmed by its Zacks Industry Rank #91, which places it in the top 36% of more than 250 Zacks industries.
Given this encouraging backdrop, we present three airline stocks, Alaska Air Group, Inc. (ALK - Free Report) , Allegiant Travel Company (ALGT - Free Report) and JetBlue Airways Corporation (JBLU - Free Report) , which have improved their third-quarter 2024 guidance.
Seattle, WA-based airline heavyweight Alaska Air raised its third-quarter 2024 adjusted earnings per share (EPS) guidance to the range of $2.15-$2.25 from the previously guided range of $1.40-$1.60. The Zacks Consensus Estimate is currently pegged at $2.05 per share. Improved revenue and fuel cost outlook have led to the encouraging EPS forecast.
Alaska Air has witnessed upbeat air travel demand during the summer season, offering hassle-free service for guests with a 99.3% completion rate quarter-to-date. Backed by the upbeat demand, Alaska Air now expects its third-quarter 2024 revenue per available seat mile (a key measure of unit revenues) to be up 2% on a year-over-year basis, an improvement from the previous forecast of flat to positive.
ALK continues to expect third-quarter capacity (measured in available seat miles) to increase in the range of 2-3% on a year-over-year basis. Third-quarter 2024 economic fuel cost per gallon is now expected to be in the range of $2.60-$2.70 (prior view: $2.85-$2.95).
Allegiant now anticipates its third-quarter capacity for scheduled service to increase 1.6% on a year-over-year basis, an improvement from the prior expectation of an increase of 1.3%. Operating margin is now expected to decline in the 0.5-1.5% range, which marks an improvement over the prior forecast to decline in the 4.5-6.5% band.
Loss per share is now anticipated to be in the range of $1.75-$2.25, which marks an improvement from the prior expectation of $2.50-$3.50. The Zacks Consensus Estimate is pegged at a loss of $2.48 per share.
Third-quarter unit revenues are likely to be down 5.5% year over year compared with the prior expectation to be down 7.5%. Third-quarter 2024 fuel cost per gallon is expected to be $2.70, down from the prior view of $2.80. Non-fuel unit costs are expected to be up almost 4.5% on a year-over-year basis, an upside of 2.5 points from the prior view of increasing 7%.
Long Island City, NY-based airline JetBlue has recently issued improved third-quarter 2024 guidance on the back of upbeat travel demand and low fuel costs.
JBLU now anticipates its third-quarter revenues to be down 2.5% to up 1% on a year-over-year basis. This marks an improvement from the previous guidance of a decline in the range of 1.5-5.5%. JBLU now expects its third-quarter capacity to decline in the 3-5% range, which marks an improvement over the prior forecast to decline in the 3-6% band.
JetBlue now anticipates third-quarter 2024 average fuel cost per gallon in the range of $2.70-$2.80 (prior view: $2.82 - $2.97). JBLU now anticipates consolidated operating costs per available seat mile (excluding fuel and special items) to increase in the range of 5-7%, down from the prior expectation of a 6-8% increase.
To Sum Up
Despite grappling with issues like CrowdStrike (CRWD - Free Report) -induced global technology outage across the industry, production delays at Boeing (BA - Free Report) hurting the fleet-related plans of airlines and weak pricing power, investors are keenly waiting for third-quarter earnings releases of airlines given the encouraging outlooks, backed by the tailwinds mentioned in the write-up.
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Low Fuel Costs & Rosy Travel Demand Likely to Aid Airlines' Q3 Results
The third-quarter 2024 earnings cycle is scheduled to start shortly for players in the Zacks Airline industry, with Atlanta, GA-based airline heavyweight Delta Air Lines (DAL - Free Report) slated to release its results on Oct. 10, 2024, before market open. Airlines are expected to perform well in the September quarter, driven by increased passenger volumes and declining fuel costs.
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.
Further, the decline in expenses on fuel represents another tailwind for the industry. Notably, oil prices declined 14% in the July-September period. As fuel expenses represent a key input cost for any transportation player, a decline in oil prices bodes well for the bottom-line growth of airline stocks.
Backed by these tailwinds mentioned above, the industry has had a solid run on the bourse over the past three months. The Zacks Airline industry has risen 12.6% in the past three months, outperforming 4.6% growth of the broader Zacks Transportation sector and a 4% rise of the Zacks S&P 500 Composite.
Three-Month Price Comparison
The buoyancy in the industry is further confirmed by its Zacks Industry Rank #91, which places it in the top 36% of more than 250 Zacks industries.
Given this encouraging backdrop, we present three airline stocks, Alaska Air Group, Inc. (ALK - Free Report) , Allegiant Travel Company (ALGT - Free Report) and JetBlue Airways Corporation (JBLU - Free Report) , which have improved their third-quarter 2024 guidance.
Currently, Alaska Air sports a Zacks Rank #1 (Strong Buy). Allegiant and JetBlue presently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bullish Q3 Projections: ALK, ALGT, JBLU
Seattle, WA-based airline heavyweight Alaska Air raised its third-quarter 2024 adjusted earnings per share (EPS) guidance to the range of $2.15-$2.25 from the previously guided range of $1.40-$1.60. The Zacks Consensus Estimate is currently pegged at $2.05 per share. Improved revenue and fuel cost outlook have led to the encouraging EPS forecast.
Alaska Air has witnessed upbeat air travel demand during the summer season, offering hassle-free service for guests with a 99.3% completion rate quarter-to-date. Backed by the upbeat demand, Alaska Air now expects its third-quarter 2024 revenue per available seat mile (a key measure of unit revenues) to be up 2% on a year-over-year basis, an improvement from the previous forecast of flat to positive.
ALK continues to expect third-quarter capacity (measured in available seat miles) to increase in the range of 2-3% on a year-over-year basis. Third-quarter 2024 economic fuel cost per gallon is now expected to be in the range of $2.60-$2.70 (prior view: $2.85-$2.95).
Allegiant now anticipates its third-quarter capacity for scheduled service to increase 1.6% on a year-over-year basis, an improvement from the prior expectation of an increase of 1.3%. Operating margin is now expected to decline in the 0.5-1.5% range, which marks an improvement over the prior forecast to decline in the 4.5-6.5% band.
Loss per share is now anticipated to be in the range of $1.75-$2.25, which marks an improvement from the prior expectation of $2.50-$3.50. The Zacks Consensus Estimate is pegged at a loss of $2.48 per share.
Third-quarter unit revenues are likely to be down 5.5% year over year compared with the prior expectation to be down 7.5%. Third-quarter 2024 fuel cost per gallon is expected to be $2.70, down from the prior view of $2.80. Non-fuel unit costs are expected to be up almost 4.5% on a year-over-year basis, an upside of 2.5 points from the prior view of increasing 7%.
Long Island City, NY-based airline JetBlue has recently issued improved third-quarter 2024 guidance on the back of upbeat travel demand and low fuel costs.
JBLU now anticipates its third-quarter revenues to be down 2.5% to up 1% on a year-over-year basis. This marks an improvement from the previous guidance of a decline in the range of 1.5-5.5%. JBLU now expects its third-quarter capacity to decline in the 3-5% range, which marks an improvement over the prior forecast to decline in the 3-6% band.
JetBlue now anticipates third-quarter 2024 average fuel cost per gallon in the range of $2.70-$2.80 (prior view: $2.82 - $2.97). JBLU now anticipates consolidated operating costs per available seat mile (excluding fuel and special items) to increase in the range of 5-7%, down from the prior expectation of a 6-8% increase.
To Sum Up
Despite grappling with issues like CrowdStrike (CRWD - Free Report) -induced global technology outage across the industry, production delays at Boeing (BA - Free Report) hurting the fleet-related plans of airlines and weak pricing power, investors are keenly waiting for third-quarter earnings releases of airlines given the encouraging outlooks, backed by the tailwinds mentioned in the write-up.