The past week saw the airline space teeming with considerable friction. The dispute between Delta Air Lines DAL and Southwest Airlines LUV over gates at the Dallas Love Field airport heated up as the expiration of the agreement between the carriers drew nearer. Spicing up the dispute further, Virgin America VA came out in full support of fellow low-cost carrier Southwest on the issue.
In addition to this discord, Deutsche Lufthansa Aktiengesellschaft DLAKY also made to the headlines, albeit for the wrong reasons. The German carrier now faces the prospect of its operations being severely hampered amid the busy summer travel season ahead, with flight attendants threatening to go on strike if their demands are not met by Jun 30.
As a silver lining, Latin America’s GOL Linhas Aereas Inteligentes S.A. GOL released impressive traffic data for the month of May on the back of strong domestic demand. Moreover, airfares in the industry climbed 5.7% in the month after witnessing downturns for two consecutive months.
On the price front, the NYSE ARCA Airline index gained 5.54% over the past week buoyed by the positive sentiment within the industry as capacity concerns took a backseat. Stocks also gained as oil prices slipped during the week.
(Read the last Airline Stock Roundup for June 17, 2015)
Recap of the Past Week’s Most Important Stories
1. The dispute over gates at the Dallas Love Field airport got murkier with Delta moving court over the issue. Dallas-based Southwest Airlines, which controls 18 of 20 gates at the Dallas Love Field airport, intends to strengthen its presence further at the city-owned airport by adding more flights later this year.
Southwest wants Delta, which currently operates five daily flights to Atlanta from one of Southwest’s gates, to discontinue operations at the airport after their current agreement expires on Jul 6 (read more: Southwest-Delta in Love Field Gate Feud, Virgin America Joins).
2. Employee-related concerns continue to haunt Lufthansa. The largest German carrier is now confronted with the possibility of its flight attendants going on strike, unless the company is able to come up with an acceptable plan by Jun 30, pertaining to the pay and retirement conditions of its cabin crew (read more: Lufthansa Faces June 30 Deadline to Avert Cabin Crew Strike).
3. Traffic at GOL Linhas inched up 4.2% in May 2015 on a 2.5% increase in capacity. Load factor increased 130 basis points to 75.8% as the increase in traffic was more than the rise in capacity (read more: GOL Linhas May Traffic Rises on Increased Domestic Demand).
4. Data released by the Bureau of Labor Statistics suggest that average airfares in the U.S. for the month of May have increased 5.7% over May 2014, on a seasonally adjusted basis. The increase made for good news as prior to this, airline fares had declined for two successive months. Concerns of oversupply hurting the capacity discipline of the industry will be further reduced if this trend of increasing airfares persists in the coming months as well (read more: Airline Stocks Gain as Capacity Woes Dip, May Airfares Rise).
5. According to a report appearing in the Reuters, United Airlines intends to introduce a couple of used Boeing planes within its fleet later in the month. The planes were previously operated by Copa Holdings’ CPA subsidiary, Copa Airlines (read more: United Airlines Adds Used Boeing Planes, Boosts Fleet Size).
6. JetBlue Airways JBLU has decided to introduce its premium service (Mint) on flights from Boston to San Francisco and Los Angeles, effective next year. From Oct 2015, the carrier intends to expand its Mint service on flights from the JFK airport in New York City to Los Angeles and San Francisco (read more: JetBlue Plans to Step Up Mint Service at JFK).
Performance
The following table shows the price movement of the major airline players over the past week and during the last 6 months.
|
Company |
Past Week |
Last 6 months |
|
HA |
4.90% |
-0.45% |
|
UAL |
8.20% |
-14.94% |
|
GOL |
0.0% |
-51.36% |
|
DAL |
6.24% |
-10.30% |
|
JBLU |
8.38% |
36.45% |
|
AAL |
8.03% |
-16.92% |
|
SAVE |
4.19% |
-13.61% |
|
LUV |
2.92% |
-16.99% |
|
CPA |
2.23% |
-14.94% |
|
ALK |
7.50% |
13.28% |
As seen in the chart above, all stocks traded in the green over the past week with the JetBlue Airways as the biggest gainer, its shares appreciating 8.38%. On the other hand, most of the stocks have shed value over the last six months. Shares of Latin-American carrier GOL Linhas depreciated the most (51.36%) during this period.
What’s Next in the Airline Biz?
Apart from Delta’s annual meeting, nothing major is lined up in the coming days. So stay tuned for the usual news updates. Focus will also remain on the price movement of airline stocks given the volatile nature exhibited by oil prices lately.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment