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Airline Stock Roundup: LUV, AAL & JBLU's Q3 Earnings Reports & SAVE in Focus
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In the past week, American Airlines (AAL - Free Report) and Southwest Airlines (LUV - Free Report) reported better-than-expected earnings per share and revenues for the third quarter of 2024. Quarterly earnings declined at both these carriers on a year-over-year basis, mainly due to high labor costs. JetBlue Airways’ (JBLU - Free Report) loss narrowed in the third quarter due to low fuel costs but it gave a disappointing outlook for current-year revenues.
Spirit Airlines (SAVE - Free Report) , which is struggling with rising debt and a lack of profitability, also grabbed headlines with fellow budget carrier Frontier Airlines reportedly in talks with it regarding a merger. Frontier Airlines is owned by Frontier Group Holdings (ULCC - Free Report) .
1 American Airlines’ third-quarter 2024 earnings (excluding 53 cents from non-recurring items) of 30 cents per share beat the Zacks Consensus Estimate of 13 cents. In the year-ago quarter, AAL had reported earnings of 38 cents per share. The year-over-year bottom-line contraction was mainly due to high labor costs. Operating revenues of $13.65 billion surpassed the Zacks Consensus Estimate of $13.49 billion and increased 1.2% year over year.
The airline lifted its earnings per share forecast for 2024, citing improved pricing power as the airline industry cut down excess capacity in the domestic market. AAL’s management now expects current-year adjusted earnings per share in the $1.35-$1.60 range (earlier expectation was in the range of 70 cents-$1.30). AAL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. Southwest Airlines reported third-quarter 2024 earnings of 15 cents per share, which outpaced the Zacks Consensus Estimate of 5 cents but declined 60.5% from the year-ago reported quarter. Revenues of $6.87 billion surpassed the Zacks Consensus Estimate of $6.79 billion and improved 5.3% year over year. LUV expects non-fuel unit costs to increase 11-13% in the fourth quarter from the comparable period in 2023.
In another development, LUV reached an agreement with Elliott Investment Management. Per the deal, Elliott Investment Management will now have multiple seats on LUV’s board, with David Cush, Sarah Feinberg, Dave Grissen, Gregg Saretsky and Patricia Watson being nominated as independent board members. Pierre Breber will also join the board. These appointments are effective Nov. 1, 2024. Per the agreement, LUV’s executive chairman Gary Kelly will retire effective Nov. 1. Elliott has withdrawn its request to call a special meeting of shareholders.
3. JetBlue Airways incurred third-quarter 2024 loss (excluding one cent per share from non-recurring items) of 16 cents per share, narrower than the Zacks Consensus Estimate of a loss of 26 cents. In the year-ago quarter, JBLU had incurred a loss of 39 cents per share. Operating revenues of $2.36 billion beat the Zacks Consensus Estimate of $2.34 billion and increased 0.5% year over year.
For 2024, capacity is now envisioned to be down in the 2.5-4.5% range (prior view: down 2.5-5%). CASM, excluding fuel and special items, is predicted to be up in the 7%-8% range. Total revenues are projected to tumble in the range of 4-5%.
5. Loss-making ultra-low-cost carrier Spirit Airlines, currently engulfed in financial difficulties, reached an agreement with its credit card processor U.S. Bank National Association to extend a debt refinancing deadline by two months until Dec. 23. This deal temporarily avoided the threat of bankruptcy. In another effort to improve its financial standing, SAVE, which expects adjusted operating margin in in third quarter of 2024 to be - 24.5%, has decided to sell 23 Airbus aircraft to GA Telesis, generating approximately $519 million.
Frontier Airlines has reportedly renewed its bid for SAVE and is in early merger talks with the latter. In 2022, ULCC was close to acquiring Spirit. Ultimately, JBLU won the bidding war for SAVE. JBLU’s deal to buy SAVE fell through after the U.S. Department of Justice blocked it.
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 NYSE ARCA Airline Index increased 1.5% to $67.53, as most stocks in the table above traded in the green. Over the past six months, the NYSE ARCA Airline Index increased by 11.5%.
What’s Next in the Airline Space?
With the third-quarter earnings season almost over for airlines, a handful of carriers are left to report their financial numbers. On the non-earnings front, a few October traffic reports are expected in the coming days. Further updates regarding LUV’s deal with Elliott Investment Management cannot be ruled out.
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Airline Stock Roundup: LUV, AAL & JBLU's Q3 Earnings Reports & SAVE in Focus
In the past week, American Airlines (AAL - Free Report) and Southwest Airlines (LUV - Free Report) reported better-than-expected earnings per share and revenues for the third quarter of 2024. Quarterly earnings declined at both these carriers on a year-over-year basis, mainly due to high labor costs. JetBlue Airways’ (JBLU - Free Report) loss narrowed in the third quarter due to low fuel costs but it gave a disappointing outlook for current-year revenues.
Spirit Airlines (SAVE - Free Report) , which is struggling with rising debt and a lack of profitability, also grabbed headlines with fellow budget carrier Frontier Airlines reportedly in talks with it regarding a merger. Frontier Airlines is owned by Frontier Group Holdings (ULCC - Free Report) .
Read the Last Airline Roundup here
Recap of the Recent Most Important Stories
1 American Airlines’ third-quarter 2024 earnings (excluding 53 cents from non-recurring items) of 30 cents per share beat the Zacks Consensus Estimate of 13 cents. In the year-ago quarter, AAL had reported earnings of 38 cents per share. The year-over-year bottom-line contraction was mainly due to high labor costs. Operating revenues of $13.65 billion surpassed the Zacks Consensus Estimate of $13.49 billion and increased 1.2% year over year.
The airline lifted its earnings per share forecast for 2024, citing improved pricing power as the airline industry cut down excess capacity in the domestic market. AAL’s management now expects current-year adjusted earnings per share in the $1.35-$1.60 range (earlier expectation was in the range of 70 cents-$1.30). AAL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
2. Southwest Airlines reported third-quarter 2024 earnings of 15 cents per share, which outpaced the Zacks Consensus Estimate of 5 cents but declined 60.5% from the year-ago reported quarter. Revenues of $6.87 billion surpassed the Zacks Consensus Estimate of $6.79 billion and improved 5.3% year over year. LUV expects non-fuel unit costs to increase 11-13% in the fourth quarter from the comparable period in 2023.
In another development, LUV reached an agreement with Elliott Investment Management. Per the deal, Elliott Investment Management will now have multiple seats on LUV’s board, with David Cush, Sarah Feinberg, Dave Grissen, Gregg Saretsky and Patricia Watson being nominated as independent board members. Pierre Breber will also join the board. These appointments are effective Nov. 1, 2024. Per the agreement, LUV’s executive chairman Gary Kelly will retire effective Nov. 1. Elliott has withdrawn its request to call a special meeting of shareholders.
3. JetBlue Airways incurred third-quarter 2024 loss (excluding one cent per share from non-recurring items) of 16 cents per share, narrower than the Zacks Consensus Estimate of a loss of 26 cents. In the year-ago quarter, JBLU had incurred a loss of 39 cents per share. Operating revenues of $2.36 billion beat the Zacks Consensus Estimate of $2.34 billion and increased 0.5% year over year.
For 2024, capacity is now envisioned to be down in the 2.5-4.5% range (prior view: down 2.5-5%). CASM, excluding fuel and special items, is predicted to be up in the 7%-8% range. Total revenues are projected to tumble in the range of 4-5%.
5. Loss-making ultra-low-cost carrier Spirit Airlines, currently engulfed in financial difficulties, reached an agreement with its credit card processor U.S. Bank National Association to extend a debt refinancing deadline by two months until Dec. 23. This deal temporarily avoided the threat of bankruptcy. In another effort to improve its financial standing, SAVE, which expects adjusted operating margin in in third quarter of 2024 to be - 24.5%, has decided to sell 23 Airbus aircraft to GA Telesis, generating approximately $519 million.
Frontier Airlines has reportedly renewed its bid for SAVE and is in early merger talks with the latter. In 2022, ULCC was close to acquiring Spirit. Ultimately, JBLU won the bidding war for SAVE. JBLU’s deal to buy SAVE fell through after the U.S. Department of Justice blocked it.
Performance
The following table shows the price movement of the major airline players over the past week and during the last six months.
The NYSE ARCA Airline Index increased 1.5% to $67.53, as most stocks in the table above traded in the green. Over the past six months, the NYSE ARCA Airline Index increased by 11.5%.
What’s Next in the Airline Space?
With the third-quarter earnings season almost over for airlines, a handful of carriers are left to report their financial numbers. On the non-earnings front, a few October traffic reports are expected in the coming days. Further updates regarding LUV’s deal with Elliott Investment Management cannot be ruled out.