Airline Stock Roundup: LUV, JBLU and HA After Q1 Loss, UAL at a Glance
Over the past week, key industry players like South West Airlines LUV, Jet Blue Airways JBLU, SkyWest SKYW and Hawaiian Funds HA released their respective results for the first quarter of 2022. With omicron issues hurting results, primarily early in the quarter, the above carriers except SkyWest reported a loss.
However, apart from Hawaiian Holdings, whose June quarter results are likely to be affected by the delay in the full restoration of its Japanese network, companies like LUV expect profitability due to demand for air transport. optimistic.
With the first quarter earnings season underway, a plethora of airline press releases have also been discussed in the report from the previous week.
On the unpaid front, United Airlines’ UAL management said that to meet the expected increase in demand, UAL is aiming to significantly increase its transatlantic capacity.
Summary of the latest Top Stories
1. Southwest Airlines, which currently carries a Zacks Rank #3 (Hold), suffered a loss (excluding 15 cents of one-time items) of 32 cents in the first quarter of 2022, narrower than the estimate of the Zacks consensus of a loss of 34 cents. However, the amount of the loss decreased by 81.4% year-on-year. LUV’s performance in the first quarter was impacted by Omicron-induced issues in January and February.
For April, LUV expects managed business revenue to decline approximately 30% from the comparable period level in 2019. Southwest Airlines expects sequential improvement in managed business revenue in May and June compared to their respective 2019 levels.
Anticipating continued improvement in bookings, the carrier expects to turn a profit in the last three quarters of 2022 as well as for the full year. Management expects operating revenue to increase 8-12% in the second quarter compared to the comparable period level in 2019. Economic fuel costs per gallon are expected to be between $3.05 and $3.15 at second trimester. Due to increasing labor and airport costs as well as declining productivity levels, LUV expects unit costs, excluding fuel expenses, to oil and profit sharing, and special items, increase 14-18% in the current quarter compared to the comparable period level in 2019. Interest expense is expected to be $90 million in second trimester.
For 2022, Southwest Airlines expects capacity to decline approximately 4% from 2019 levels. Economic fuel costs per gallon are estimated to be between $2.75 and $2.85. Cost per available seat mile (CASM), excluding fuel, oil and profit sharing expenses, and special items, is expected to increase 12-16% in 2022 from 2019 levels. Interest expense is expected to be $360 million in 2022. LUV expects to end the year with a total aircraft count of 814. The effective tax rate is expected to be 24-26% over the course of the year. Capital expenditure is still expected to be around $5 billion in 2022.
2. JetBlue Airways suffered a first-quarter 2022 loss (excluding 1 cent of one-time items) of 80 cents per share, comparing favorably to Zacks’ consensus estimate of an 85-cent loss.
JBLU management expects second quarter 2022 capacity to be flat or up to 3% higher than second quarter 2019 actuals. CASM, excluding fuel and special items, is expected to increase 15 to 17 % vs. Q2 2019 actual. Total revenue is expected to increase 11-16% vs. Q2 2019 actual. Revenue projection includes up to four points of impact from the operational disruption of april. Average fuel cost per gallon in the June quarter is estimated at $3.79. Capital expenditures for the June quarter are expected to be approximately $300 million.
3. Hawaiian Holdings’ Q1 2022 loss (excluding 15 cents of one-time items) of $2.54 per share was larger than Zacks’ consensus estimate of a loss of $2.51. HA reported a loss of $3.85 in the prior year quarter. Additionally, quarterly revenue of $477.2 million jumped more than 100% year over year, but fell short of Zacks’ consensus estimate of $482.1 million. Capacity for the June quarter is expected to decline in the 11.5-14.5% range from actuals in the second quarter of 2019 due to the delay in fully restoring its network in Japan. Total revenue expected to fall 8-12% from Q2 2019 levels.
4. United Airlines intends to introduce more flights between the United States and Europe. UAL will increase its capacity by 25% this summer compared to 2019 levels. Following this, UAL will serve more transatlantic destinations than any other US carrier combined. Additionally, it will be the largest airline across the Atlantic for the first time in history. As part of the expansion campaign, UAL aims to add nonstop flights to five distinct leisure destinations not currently served by any other North American airline. UAL also aims to launch five non-stop flights to some of Europe’s most popular business and tourist destinations.
5. SkyWest reported Q1 2022 earnings of 35 cents per share, beating Zacks’ consensus estimate of 3 cents. In the prior year quarter, SKYW reported earnings of 71 cents. The 50.7% decline in revenue year over year is attributable to the 50.6% increase in total costs. Revenue of $735.2 million topped Zacks’ consensus estimate of $667.3 million. Revenue jumped 37.53% year-over-year, driven by a 13% increase in block hours (a measure of aircraft utilization) on completed flights. COVID-19-related revenue concessions granted to SkyWest’s key airline partners in the first quarter of 2021 also drove year-over-year revenue growth.
Revenue from flight agreements (contributing 96.3% to revenue) jumped 38.5% from the year-ago quarter figure. Expenditure on salaries, wages and benefits increased by 36.5% during the quarter. With the rise in the price of oil, spending on aircraft fuel soared 30.7% year-over-year. The airline, which carried 53.9% more passengers year-on-year, reported a 12.6% increase in block hours. The load factor (percentage of seats occupied by passengers) increased by 20.9 percentage points to 77.6% in the March quarter, due to the increase in demand for air travel.
SkyWest ended the first quarter with cash and marketable securities of $856 million, down slightly from $860 million at the end of 2021. Long-term debt (net of current maturities) was $2.79 billion. dollars against 2.71 billion dollars at the end of December 2021.
The following table shows the price development of the major airline players over the past week and over the past six months.
Image source: Zacks Investment Research
The chart above shows that most airline stocks have been trading in the red over the past week. The NYSE ARCA Airline Index fell 4.3% to $77.94. Over the past six months, the NYSE ARCA Airline Index has fallen 11.5%.
What’s next in airspace?
With other airlines expected to release their first quarter 2022 financial statements soon, investors interested in the industry will be keeping a close eye on their performance.
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