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In the past week, Copa Holdings (CPA - Free Report) reported better-than-expected earnings per share for the third quarter of 2024. However, quarterly earnings declined significantly year over year due to high operating costs. Another Latin American carrier Azul (AZUL - Free Report) reported a wider-than-expected loss per share for the third quarter of 2024.
United Airlines (UAL - Free Report) expects passenger volumes to be high this winter holiday season, driven by increased travel to European destinations. AllegiantTravel (ALGT - Free Report) reported disappointing traffic numbers for October. Spirit Airlines filed for bankruptcy protection, which was widely expected after its merger talks with Frontier Airlines, which is owned by Frontier Group (ULCC - Free Report) , halted.
Recap of the Recent Most Important Stories
1. Copa Holdings’ third-quarter 2024 earnings per share of $3.50 surpassed the Zacks Consensus Estimate of $3.48 but declined 20.3% year over year. Revenues of $854.7 million lagged the Zacks Consensus Estimate of $860.3 million and fell 1.5% year over year. Passenger revenues (which contributed 95.7% to the top line) decreased 1.8% from the third quarter of 2023. The downside was mainly led by the last-minute suspension of flights between Panama and Venezuela at the end of July, weaker currencies in Latin America, and increased industry capacity in the region. As a result, passenger yield declined 8.7% year over year and load factor (percentage of seats filled by passengers) decreased 1.6 percentage points.
CPA’s management expects current-year consolidated capacity to grow 9% year over year. The load factor is anticipated at 86% (prior view: 86.5%). The operating margin for the current year is expected to be 21-22%.
CPA was also in the news recently, owing to its upbeat traffic report for October. That news was covered in detail in the previous week’s write-up.
2. Azul incurred a loss of 32 cents per share in the third quarter of 2024, wider than the Zacks Consensus Estimate of a loss of 10 cents. Total revenues of $925.1 million lagged the Zacks Consensus Estimate of $953.2 million. With more people taking to the skies, Azul’s passenger revenues, contributing 92.8% to the top line, grew 4% year over year. For 2024, Azul expects capacity to increase 6% (prior view: 7% growth) from 2023.
3. United Airlines, which had a busy summer this year, carrying a record 48 million passengers, expects travel to surge this winter, led by increased travel to Europe. UAL stated that bookings to European destinations have been exceptionally strong, and have moved up nearly 30% from that recorded in 2019 and 10% year over year. Driven by upbeat passenger volumes, UAL expects to carry 25 million passengers during the holiday period, up 6% from the year-ago level.
4. At Allegiant, scheduled traffic (measured in revenue passenger miles) fell 15.7% from October 2023. Capacity (measured in available seat miles) for scheduled service fell 10.2% year over year. As traffic reduction was more than capacity contraction, the load factor in October 2024 declined to 78.5% from 83.7% a year ago.
5. Budget carrier Spirit Airlines filed for bankruptcy protection and reached an agreement to restructure its debt with its bondholders. Spirit Airlines flights will continue normally during the bankruptcy process. The financially ailing Spirit Airlines was dealt a body blow after the merger talks with Frontier Airlines fell through. Spirit Airlines' mounting debt, combined with declining revenues and rising costs, contributed to it ultimately filing for Chapter 11 bankruptcy protection. As part of the restructuring support agreement with existing bondholders, Spirit Airlines has received backstopped commitments for a $350-million equity investment. Spirit Airlines will complete a deleveraging transaction to equitize $795 million of funded debt.
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 decreased 6.9% to $63.94, as most stocks in the table above traded in the red. Over the past six months, the NYSE ARCA Airline Index increased 2.3%.
What’s Next in the Airline Space?
With the earnings season over, we expect updates from many carriers regarding their plans to meet the anticipated demand swell during the winter travel season.
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Airline Stock Roundup: CPA Q3 Earnings Beat, ALGT's Traffic & More
In the past week, Copa Holdings (CPA - Free Report) reported better-than-expected earnings per share for the third quarter of 2024. However, quarterly earnings declined significantly year over year due to high operating costs. Another Latin American carrier Azul (AZUL - Free Report) reported a wider-than-expected loss per share for the third quarter of 2024.
United Airlines (UAL - Free Report) expects passenger volumes to be high this winter holiday season, driven by increased travel to European destinations. Allegiant Travel (ALGT - Free Report) reported disappointing traffic numbers for October. Spirit Airlines filed for bankruptcy protection, which was widely expected after its merger talks with Frontier Airlines, which is owned by Frontier Group (ULCC - Free Report) , halted.
Recap of the Recent Most Important Stories
1. Copa Holdings’ third-quarter 2024 earnings per share of $3.50 surpassed the Zacks Consensus Estimate of $3.48 but declined 20.3% year over year. Revenues of $854.7 million lagged the Zacks Consensus Estimate of $860.3 million and fell 1.5% year over year. Passenger revenues (which contributed 95.7% to the top line) decreased 1.8% from the third quarter of 2023. The downside was mainly led by the last-minute suspension of flights between Panama and Venezuela at the end of July, weaker currencies in Latin America, and increased industry capacity in the region. As a result, passenger yield declined 8.7% year over year and load factor (percentage of seats filled by passengers) decreased 1.6 percentage points.
CPA’s management expects current-year consolidated capacity to grow 9% year over year. The load factor is anticipated at 86% (prior view: 86.5%). The operating margin for the current year is expected to be 21-22%.
CPA was also in the news recently, owing to its upbeat traffic report for October. That news was covered in detail in the previous week’s write-up.
CPA currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
2. Azul incurred a loss of 32 cents per share in the third quarter of 2024, wider than the Zacks Consensus Estimate of a loss of 10 cents. Total revenues of $925.1 million lagged the Zacks Consensus Estimate of $953.2 million. With more people taking to the skies, Azul’s passenger revenues, contributing 92.8% to the top line, grew 4% year over year. For 2024, Azul expects capacity to increase 6% (prior view: 7% growth) from 2023.
3. United Airlines, which had a busy summer this year, carrying a record 48 million passengers, expects travel to surge this winter, led by increased travel to Europe. UAL stated that bookings to European destinations have been exceptionally strong, and have moved up nearly 30% from that recorded in 2019 and 10% year over year. Driven by upbeat passenger volumes, UAL expects to carry 25 million passengers during the holiday period, up 6% from the year-ago level.
4. At Allegiant, scheduled traffic (measured in revenue passenger miles) fell 15.7% from October 2023. Capacity (measured in available seat miles) for scheduled service fell 10.2% year over year. As traffic reduction was more than capacity contraction, the load factor in October 2024 declined to 78.5% from 83.7% a year ago.
5. Budget carrier Spirit Airlines filed for bankruptcy protection and reached an agreement to restructure its debt with its bondholders. Spirit Airlines flights will continue normally during the bankruptcy process. The financially ailing Spirit Airlines was dealt a body blow after the merger talks with Frontier Airlines fell through. Spirit Airlines' mounting debt, combined with declining revenues and rising costs, contributed to it ultimately filing for Chapter 11 bankruptcy protection. As part of the restructuring support agreement with existing bondholders, Spirit Airlines has received backstopped commitments for a $350-million equity investment. Spirit Airlines will complete a deleveraging transaction to equitize $795 million of funded debt.
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 decreased 6.9% to $63.94, as most stocks in the table above traded in the red. Over the past six months, the NYSE ARCA Airline Index increased 2.3%.
What’s Next in the Airline Space?
With the earnings season over, we expect updates from many carriers regarding their plans to meet the anticipated demand swell during the winter travel season.