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Airline Stock Roundup: A4A's Spring Travel Forecast Bullish, UAL & AAL In Focus

Published 03/21/2018, 03:19 AM
Updated 07/09/2023, 06:31 AM
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In the last five trading days, Airlines for America (‘A4A’) — a premier trade organization — for U.S. carriers unveiled an upbeat forecast for the current spring season. Per the projection, these companies are expected to profit considerably this spring (Mar 1-Apr 30) as travel demand is anticipated to increase 4% year over year.

Meanwhile, United Airlines — the wholly-owned subsidiary of United Continental Holdings, Inc. (NYSE:UAL) — has halted its service pertaining to the transportation of pets in its cargo section, following the death of a French bulldog on one of its flights. This apart, the transportation of a Kansas-bound German shepherd to Japan also dented its market reputation with respect to its pet handling policy. Markedly, these two mishaps were the reasons behind United Airlines’ decision to suspend its pet cargo travel service.

American Airlines Group Inc. (NASDAQ:AAL) was another newsmaker during the week by virtue of its agreement with United Airlines on the number of gates to be assigned to each at Chicago's O'Hare International airport.

Transportation - Airline Industry 5YR % Return

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Mar 7, 2018).

Recap of the Past Week’s Most Important Stories

1. According to a forecast made by A4A, approximately 151 million passengers are anticipated to opt for air travel in spring. In fact, the spring of 2018 is expected to be the busiest one of all times for American carriers in terms of air travel. The forecast is of 2.47 million fliers per day during the period, up 94,000 a day from the comparable year-ago figure. U.S. carriers are planning to meet the surge in demand through the usage of new routes and larger planes. The carriers aim to offer 114,000 additional seats per day through these measures.

2. The fiasco at United Continental, which resulted in the tragic death of a black French bulldog puppy on one of its flights on Mar 12, 2018, has not gone unnoticed by lawmakers in the United States. According to a Reuters report, U.S. senators — John Kennedy and Catherine Cortez Masto — have introduced a legislation aimed at preventing airlines from putting live animals in overhead bins. The senators have also proposed the imposition of fines on violations of the animal-friendly measure (Read more: Will United Continental's Dog Fiasco Lead to New Laws?).

United Continental carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. A major hurdle pertaining to the proposed $8.5 billion expansion plan at Chicago’s O’Hare International Airport was removed when American Airlines and United Airlines resolved their dispute on gate allocation. Both carriers, having major hubs at Chicago’s largest airport, were levelling charges against each other. However, the resolution of the problem is a major step toward the expansion of one of the busiest airports of the world.

4. European low-cost carrier, Ryanair Holdings (NASDAQ:RYAAY) , has reportedly taken a 24.9% stake in an Vienna-based carrier, LaudaMotion. The carrier was founded by former motor racing champion Niki Lauda and is formed out of bankrupt airline Niki, formerly a subsidiary of Air Berlin. Ryanair aims to increase its holdings in LaudaMotion to 75% as soon as possible, subject to clearance by European regulators. The move by Ryanair might be aimed to reduce the dominance of Deutsche Lufthansa (DE:LHAG) AG (OTC:DLAKY) in Germany and Austria.

Performance

The following table shows the price movement of the major airline players over the last week and in the past six months.

The table above shows that most airline stocks traded in the red over the past week, though the losses were muted in nature. Consequently, the NYSE ARCA Airline index decreased marginally to $121.28 in the period. Over the course of six months, the NYSE ARCA Airline index appreciated 12.7%, on the back of robust gains at the likes of Gol Linhas Aéreas Inteligentes S.A. (NYSE:GOL) , Delta Air Lines Inc. (NYSE:DAL) and JetBlue Airways Corp. (NASDAQ:JBLU) .

What's Next in the Airline Space?

Stay tuned for the usual news updates in the space.

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Ryanair Holdings PLC (RYAAY): Free Stock Analysis Report

JetBlue Airways Corporation (JBLU): Free Stock Analysis Report

Gol Linhas Aereas Inteligentes S.A. (GOL): Free Stock Analysis Report

Delta Air Lines, Inc. (DAL): Free Stock Analysis Report

United Continental Holdings, Inc. (UAL): Free Stock Analysis Report

Deutsche Lufthansa AG (DLAKY): Free Stock Analysis Report

American Airlines Group Inc. (AAL): Free Stock Analysis Report

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