CHICAGO, March 9, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: United Continental Holdings Inc. (NYSE: UAL), AMR Corporation (NYSE: AMR), Southwest Airlines Co. (NYSE: LUV), JetBlue Airways Corporation (Nasdaq: JBLU) and AirTran Holdings Inc. (NYSE: AAI).
(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
Get the most recent insight from Zacks Equity Research with the free Profit from the Pros newsletter: http://at.zacks.com/?id=4579
Here are highlights from Tuesday's Analyst Blog:
United Redraws Growth Plan
United Continental Holdings Inc. (NYSE: UAL), the largest U.S. airline reported a pull-back on its capacity growth plans for 2011 due to escalating fuel prices.
Earlier this year, United Continental announced its guidance of 1% to 2% increase in consolidated capacity in 2011. However, in light of the steeply rising fuel prices, the company now expects to reduce capacity by approximately 1% in May and approximately 4% by September. Additionally, United Continental also plans to scrap unprofitable routes and less fuel-efficient aircraft from its fleet.
Given the current changes in capacity estimates, the company expects its fiscal 2011 capacity to remain flat with the 2010 level. It estimates 2011 international capacity to increase 2.5% to 3.5% while domestic capacity to decrease 1.5% to 2.5% on a year-over-year basis.
In recent times, rising fuel prices have surfaced as a major headwind to the airlines industry. Companies are struggling hard to deal with increasing costs by lowering capacity, hiking fares or both. Giant carriers such as American Airlines, subsidiary of AMR Corporation (NYSE: AMR) has guided toward a 2.5% capacity growth in 2011, below the estimated 3.5% it issued earlier.
Domestic carrier, Southwest Airlines Co. (NYSE: LUV) has also joined the bandwagon of carriers raising airfare to keep pace with the rising fuel cost. Southwest Airlines reported a $10 price hike for a round trip representing the sixth fare rise so far in 2011. Southwest is likely to spend an additional $1.3 billion on fuel in 2011 compared to 2010, which is almost triple the net income of $459 million for 2010.
Southwest's increasing airfare did not have much of an impact on passenger numbers as suggested by the company's February traffic that grew 13% over February 2010. However, United Continental's February 2011 traffic dipped 1.1% against an increase of 1.8% in February 2010.
Fuel prices have risen over 50% to approximately $3 per gallon. Given the unrest in the Middle East, oil prices have reached about $107 a barrel. This has also compelled low-cost airlines such as JetBlue Airways Corporation (Nasdaq: JBLU), AirTran Holdings Inc. (NYSE: AAI) and Frontier Airlines to increase their ticket prices.
Given the current market scenario of increasing pricing pressure and capacity pullbacks, we currently maintain our long-term Neutral recommendation on United Continental with a Zacks #3 Rank (Hold).
Want more from Zacks Equity Research? Subscribe to the free Profit from the Pros newsletter: http://at.zacks.com/?id=5514.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today: http://at.zacks.com/?id=5516
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Leonard Zacks. As a PhD in mathematics Len knew he could find patterns in stock market data that would lead to superior investment results. Amongst his many accomplishments was the formation of his proprietary stock picking system; the Zacks Rank, which continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment
Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Register for your free subscription to Profit from the Pros at http://at.zacks.com/?id=4580.
Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.
Contact: |
|
Mark Vickery |
|
Web Content Editor |
|
312-265-9380 |
|
Visit: www.zacks.com |
|
SOURCE Zacks Investment Research, Inc.
Share this article