Last week, South West AirlinesLUV’s management has decided to begin paying quarterly dividends after a pandemic-induced hiatus of more than two years. With sustained demand for air travel in Brazil, Gol Linhas GOL reported a 28.5% year-over-year increase in traffic in November. European carrier Ryanair Holdings RYAAY reported a 9.8% year-over-year increase in passenger volume for the month of November. Jet Blue Airways JBLU has also made headlines for its eco-friendly attitude.
Read the latest airline roundup here.
Summary of the latest Top Stories
1. In November, RYAAY carried 11.2 million passengers, up from 10.2 million a year ago. The load factor (% of seats occupied by passengers) in November 2022 was 92%, compared to 87% a year ago. Ryanair currently wears a Zacks Rank No. 3 (Hold).
Ryanair also made headlines when it signed a green deal with an oil company Shell SHEL for Sustainable Aviation Fuel (SAF). The MoU will see Shell supply SAF to more than 200 Ryanair airports across Europe, primarily focusing on the airline’s main hubs in Dublin and London Stansted. Under the deal, Ryanair will be able to access 360,000 tonnes (120 million gallons) of SAF from Shell between 2025 and 2030. This will help the airline reduce its carbon emissions by around 900,000 tonnes.
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2. At Gol Linhas, November consolidated traffic was up 28.5% year-on-year. To cope with the increase in demand, the company is expanding its capacity. In the same month, capacity increased 29.7% year over year. GOL carried 26% more passengers in November compared to the previous year’s levels. Sustained traffic in its home markets leads to an optimistic scenario on a consolidated basis. In November, domestic traffic and capacity improved by 18.7% and 19.6% respectively. On the home front, 21.7% more passengers boarded GOL flights in November 2022.
3. Following the lifting of restrictions under the CARES Act, which prohibited airlines from paying dividends until September 30, 2022, Southwest Airlines management reinstated its quarterly dividend of 18 cents per share. With the carrier returning to profitability in March 2022 and expecting to be profitable for the full year 2022 as well, the decision was highly anticipated. The dividend will be paid on January 31, 2023 to its shareholders of record at the close of business on January 10.
At its Investor Day, LUV also provided projections for select items for the first quarter and full year 2023. Capacity (measured in available seat miles) is expected to grow 10% and 15% year over year. other, in the first quarter and for the full year 2023. year 2023, respectively. Fuel cost per gallon is expected to be between $3 and $3.10 in the March quarter. The same is expected in the range of $2.85 to $2.95 for the full year 2023. Non-fuel unit costs are expected to be stable or increase up to 2% year-over-year in the first quarter 2023. The metric is expected to be down in the 1-3% range for the full year. Interest expense is expected to be approximately $65 million and $250 million in the first quarter and full year 2023, respectively. Capital expenditure for the full year 2023 is expected to be between $4 billion and $4.5 billion. LUV expects to end next year with 841 aircraft in its fleet.
4. JetBlue management said it aims to reduce jet fuel emissions by 50% per revenue tonne kilometer by 2035 compared to 2019 levels. In line with Paris climate accord goals , JBLU aims to drive investment in low-carbon solutions within its operation and assess future investments in sustainability. JBLU aims to achieve net zero carbon emissions by 2040, 10 years ahead of broader airline industry goals.
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 4.4% to $58.18 over the past week. Over the past six months, the NYSE ARCA Airline Index has fallen 17.8%.
What’s next in airspace?
Delta AirlinesDAL management is expected to provide a financial outlook and provide a strategic update at an event in New York on December 14. With demand for air travel skyrocketing, we believe the management of this Atlanta-based carrier will present a rosy picture when it comes to the top line.
With oil prices still high, growth in net income is limited. As a result, market watchers will be eagerly awaiting the outlined steps to reduce costs and plunge growth. Stay tuned for other usual updates in space.
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Ryanair Holdings PLC (RYAAY): Free Stock Analysis Report
Delta Air Lines, Inc. (DAL): Free Inventory Analysis Report
Southwest Airlines Co. (LUV): Free Inventory Analysis Report
JetBlue Airways Corporation (JBLU): Free Inventory Analysis Report
Gol Linhas Aereas Inteligentes SA (GOL): Free Stock Analysis Report
Shell PLC Unsponsored ADR (SHEL): Free Stock Analysis Report
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