The past week saw Latin American carrier, Gol Linhas Aéreas Inteligentes S.A. GOL, revealing disappointing traffic data for October with all three important metrics viz. air traffic, capacity and load factor (% of seats filled by passengers) declining on a year-over-year basis.
Moreover, the past week, that was a day short of trading owing to the Thanksgiving day holiday on Nov 26, saw Germany’s Deutsche Lufthansa Aktiengesellschaft DLAKY and American Airlines Group AAL inking key labor deals. JetBlue Airways Corp. JBLU also grabbed headlines with its announcement to increase flights to Barbados.
On the price front, the NYSE ARCA Airline index inched up 0.3% over the past week with oil prices fluctuating wildly, but in the end, maintaining the status quo.
(Read the last Airline Stock Roundup for Nov 25, 2015).
Recap of the Past Week’s Most Important Stories
1. Gol Linhas revealed disappointing traffic data for October mainly plagued by domestic weakness. Traffic came in at 3 billion, down 8.5% year over year. Consolidated capacity declined 4.7% from Oct 2014. Load factor (percentage of seats filled with passengers) came in at 75.5%, down 320 basis points (read more:GOL Linhas October Traffic Falls 8.5%, Capacity Declines ).
2. Lufthansa, which has, of late, been plagued by employee-related issues, finally witnessed some positive development on the labor front. The carrier recently inked a 33-month deal covering around 30,000 employees. The deal, which runs through Dec 31, 2017, relates to the wages and pensions of the covered employees (read more: Lufthansa Inks Labor Deal, Ground Staff in Focus).
3. Following the successful launch of its seasonal Mint service on the New York to Barbados route, Long Island City, NY-based JetBlue Airways has decided to offer the premium service on a weekly basis (read more: JetBlue to Offer Weekly Mint Service Flights to Barbados).
4. Members of the union (Communications Workers of America and International Brotherhood of Teamsters) representing the reservations and gate agents of Fort Worth, TX-based American Airlines Group ratified a five-year contract with the carrier, which guarantees them higher pay. The contract covers around 14,500 passenger service employees of the company in the U.S. Approximately 9,500 members took part in the voting procedure and 73% of the votes cast were in favor of the deal (read more: American Airlines Passenger Service Staff to Get Higher Pay).
In a separate development, the U.S. Transportation Department ruled in favor of American Airlines with respect to its tussle with Delta Air Lines Inc. DAL, pertaining to flights connecting Los Angeles and Tokyo’s Haneda airport. The federal regulators, while overturning Delta’s claim that American Airlines should give up the route due to delay in starting service, ruled that the latter has time till March 27, 2016 to do so. American Airlines intends to commence operating flights on the route from Feb 11, 2016.
In June this year, Delta had surrendered one of the four routes connecting Los Angeles and Tokyo’s Haneda airport to American Airlines. However, the latter’s failure to commence flights on the route within 60 days of receiving backup authority led to Delta making the above claim on Oct 1. American Airlines subsequently requested for an extension to start the service. The request was granted by the federal regulators in the latest ruling.
Tokyo's Haneda airport is often preferred by business travelers over the Narita international airport, as the former is closer to the capital city of Japan. Naturally, the win over Delta is a significant one for American Airlines. However, the federal regulators’ ruling comes with a clause – the busy route would be handed over to Hawaiian Airlines, the wholly owned subsidiary of Hawaiian Holdings HA, in the event of American Airlines failing to start services by Mar 27.
5. In a bid to expand its operations, Hawaiian Airlines announced that it intends to fly to an additional destination in Japan from Honolulu, Hawaii. The carrier is looking to operate daily non-stop flights connecting Narita to Honolulu from July 22, 2016 (read more: Hawaiian Airlines Aims to Strengthen Japanese Footprint).
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 |
-0.08% |
52.09% |
|
UAL |
-0.87% |
1.86% |
|
GOL |
-10.14% |
-67.72% |
|
DAL |
-0.93% |
10.32% |
|
JBLU |
-0.04% |
23.98% |
|
AAL |
2.25% |
-1.19% |
|
SAVE |
6.07% |
-40.40% |
|
LUV |
0.32% |
24.38% |
|
CPA |
-9.35% |
-50.44% |
|
ALK |
1.60% |
23.51% |
As the chart above indicates, majority of the key airline stocks traded in the red over the past week. While GOL Linhas shed the most (10.14%), Spirit Airlines emerged as the biggest grosser (6.07%) last week. On the other hand, majority of the stocks gained over the last six months with Hawaiian Holdings leading the way (52.09%). GOL Linhas was yet again the biggest loser (67.72%) during the period.
What's Next in the Airline Biz?
We expect November traffic updates from carriers like Alaska Air Group ALK and Delta in the coming days. Focus will also stay on the movement of oil prices given the volatile nature exhibited lately.
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