The Zacks Analyst Blog Highlights: Spirit Airlines, Southwest Airlines, Alaska Air Group, JetBlue Airways and American Airlines Group
CHICAGO, Dec. 11, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Spirit Airlines, Inc. (Nasdaq:SAVE-Free Report), Southwest Airlines (NYSE:LUV-Free Report), Alaska Air Group (NYSE:ALK-Free Report), JetBlue Airways (Nasdaq:JBLU-Free Report) and American Airlines Group (Nasdaq:AAL-Free Report).
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Here are highlights from Wednesday's Analyst Blog:
Airline Stock Roundup
Over the past 5 trading days, major airline stocks continued their northward movement aided by weak oil prices. However, the gains were muted by the massive sell-off witnessed by the industry yesterday.
The sell-off was triggered by Spirit Airlines, Inc.'s (Nasdaq:SAVE-Free Report) statement that it was witnessing pricing pressures due to the industry's tendency to utilize the falling oil prices to lower air fares for attracting passengers. The statement was issued by the company while releasing its November traffic data.
The company said that it is facing competition primarily from Southwest Airlines (NYSE:LUV-Free Report) following the expiration of the Wright Amendment in Oct 2014. The Wright Amendment, established in 1979, originally governed traffic at Dallas Love Field (Southwest's home base) and restricted non-stop flights from Love Field to destinations only in Texas and the neighboring states.
However, we are not too perturbed by the sell-off and view it as a singular event. Additionally, the company expects operating margin in the range of 18%-19%. This is still a healthy range, only 0.5% lower than its old guidance of 18.5%-19.5%.
Apart from Spirit Airlines, most other carriers also invited attention during the period with their November traffic releases. Overall, the airline sector is going through good times with stocks having rebounded strongly from the lean period aided by healthy earnings reports, weak oil prices and the holiday season.
While companies like Southwest Airlines, Alaska Air Group (NYSE:ALK-Free Report) and JetBlue Airways (Nasdaq:JBLU-Free Report) came up with healthy rise in traffic, data released by carriers like American Airlines Group (Nasdaq:AAL-Free Report) was subdued. American Airlines' decision to spend over $2 billion to upgrade planes and hubs to improve the flying experience of its passengers and keep up with competitors also grabbed headlines.
(Read last to last week's developments here: Airline Stock Roundup for Dec 3, 2014)
Recap of Most Important Stories of the Last 5 Trading Days
1. American Airlines Group reported disappointing traffic numbers for the month of November hurt by weak international travel. Moreover, the carrier announced that it will invest over $2 billion to renovate airport lounges, modernize ticket counters apart from deploying satellite-based internet access on its international flights. The company is also looking to make certain other changes to improve the in-flight experience, primarily to attract the high-paying frequent flyers and keep up with competitors (read more: American Airlines Announces $2B Upgrade Plan).
2. Southwest Airlines witnessed an increase in air traffic in the month of November. Traffic came in at 10.90 billion, up 4.2% year-over-year. Southwest Airlines witnessed considerable growth in PRASM (passenger revenue per available seat mile) in the month mainly driven by significant increase in air travels during the Thanksgiving season (read more: Southwest Airlines' November Traffic Up on Thanksgiving).
3. Alaska Air Group reported impressive traffic data for Nov 2014 buoyed by strong demand. The company's consolidated airline traffic moved up 9.4% year over year to 2,475 million. Consolidated capacity increased 8.7% from Nov 2013 to 3,009 million. Load factor for the company improved 60 basis points from Nov 2013 to 82.3% (read more: Alaska Air Group November Traffic Rises on Higher Demand).
4. JetBlue Airways' traffic for November climbed 10.1% on a year over year basis, on a 6% capacity increase. Load factor for the company improved 310 basis points to 81.4 % in November 2014. PRASM climbed 6% year over year. The company expects PRASM in the final quarter of the year to decrease in the range of 0% and 1% on a year-over-year basis.
In a bid to expand further, JetBlue announced that it intends to launch a new flight (twice daily) between Boston Logan International airport and Cleveland Hopkins International airport on April 30 of next year. The company has initially priced the air tickets at $19.51 each for Cleveland bound flights from Apr 30 to Jun 18. The company said that tickets must be purchased before Dec 10 to avail of the low fare.
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