Over the past 5 trading days, airline stocks have exhibited a mixed momentum. While the outbreak of the Ebola virus and its impact on international air travel sounded alarm bells, Alaska Air Group, Inc.’s (ALK) multi-million-dollar deal with The Boeing Company (BA) grabbed positive attention. Further, traffic results from Hawaiian Airlines and new non-stop daily flights announced by JetBlue Airways Corporation (JBLU) were also in focus.
A Recap of Last Week’s Most Important Stories
1. Last Wednesday, shares of prominent airline companies declined following reports of the first Ebola case in the U.S. On Tuesday, the Centers for Disease Control and Prevention (CDC) confirmed that a resident of Liberia, who had flown to Texas, has been detected with the deadly virus. (Read More: Ebola Strikes US: Airline Stocks Dive)
2. JetBlue Airways announced new non-stop flights between Las Vegas and San Francisco, scheduled to begin from Jan 2015. The new route will operate two daily non-stop flights, departing first from Las Vegas.
3. Hawaiian Airlines, a subsidiary of Hawaiian Holdings, Inc. (HA), announced traffic results for the month of Sep 2014. While traffic for the month increased 3%, airline capacity grew 0.3%. Load factor touched 82.5%, up 220 basis points.
4. Alaska Air Group announced a contract worth $990 million for purchasing 10 aircraft from Boeing. The carrier announced that the new planes – all 737-900ERs — would replace its 737-400s and offer increased savings in the form of 25% more passenger capacity using the same amount of fuel.
5.American Airlines Group Inc. (AAL) is massively curtailing operations of its regional subsidiary Envoy Air by shifting some of Envoy’s Miami flights to operators with bigger planes. Post-Dec 18, Envoy will operate 37 daily departures for American Airlines in Miami with 12 planes, down from the existing 60 departures utilizing 23 planes. Further, the regional subsidiary will cut 50 jobs and also plans to do away with hanger space which will be later filled for maintenance work of some of the larger planes of American Airlines.
Performance
The following table shows the price movements of the major airline players over the past 5 trading days and during the last 6 months:
|
Company |
Last 5 Days |
Last 6 Months |
|
AAL |
-0.87% |
-7.38% |
|
ALK |
0.14% |
-8.64% |
|
CPA |
2.54% |
-17.78% |
|
DAL |
1.06% |
-8.52% |
|
GOL |
16.44% |
-32.63% |
|
HA |
-0.68% |
-9.81% |
|
JBLU |
3.90% |
23.64% |
|
LUV |
-0.98% |
-18.42% |
|
SAVE |
-4.94% |
19.36% |
|
UAL |
0.04% |
13.96% |
Over the trailing 5 sessions, airline stocks have reflected a mixed trend. Top gainers over the past 5 days include GOL Linhas A (GOL) and JetBlue Airways with 16.4% and 3.9% gains, respectively. The biggest losers for the period were Spirit Airlines, Inc. (SAVE) and Southwest Airlines with 5% and 1% decline in share prices, respectively.
Over the past 6 months, most of the stocks’ performances have remained modest. Top gainers during this period are JetBlue Airways and Spirit Airlines with 23.6% and 19.4% increase in share prices. Biggest losers during this period include GOL Linhas A and Southwest Airlines with 32.6% and 18.4% drop in share prices.
What’s Next in the Airline Biz?
In the current week, we foresee no significant changes in the airline industry and global economic factors. As a result, we expect stocks to trade in line for the remainder of this week.
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