Airline Stock Roundup: CPA's Lackluster Q4, JBLU's Traffic Report & More

In the past week, Latin American carrier — Copa Holdings (NYSE:CPA) — reported disappointing numbers for the fourth quarter of 2018, wherein earnings and revenues missed estimates. Also, its board of directors decided to trim the quarterly dividend by 25.3%.

On the non-earnings front, Copa Holdings, JetBlue Airways (NASDAQ:JBLU) and Alaska Air Group (NYSE:ALK) released their respective traffic numbers for January. While load factor (% of seats filled by passengers) increased at Alaska Air, the measure declined at JetBlue and Copa Holdings.

Southwest Airlines (NYSE:LUV) also grabbed headlines due to the crisis hampering its operations. Notably, the crisis compelled it to cancel multiple flights as mechanical issues continued to render them unfit for flying. Consequently, the low-cost carrier declared an ‘’operational emergency’’ while blaming its mechanics union — Aircraft Mechanics Fraternal Association (AMFA) — for the unprecedented crisis. It should be noted that AMFA currently represents approximately 2,400 mechanics at Southwest.

Southwest has been negotiating with the union mainly on pay-related issues for more than six years. The carrier has also apologized to its passengers for the harassments due to flight cancellations.

On the price front, the NYSE ARCA Airline Index improved 1.4% over the past week, which was a day short of trading due to President's day holiday on Feb 15.

(Read the last Airline Stock Roundup here)

Recap of the Past Week’s Most Important Stories

1. Copa Holdings’ fourth-quarter 2018 earnings (excluding $4.71 from non-recurring items) of $1.04 per share missed the Zacks Consensus Estimate of $1.06. The bottom line also plunged significantly on a year-over-year basis primarily due to high costs. Quarterly revenues slipped nearly 3% year over year to $656.1 million and lagged the Zacks Consensus Estimate of $673.6 million. Passenger revenues declined 3.2% year over year to $631.8 million. (Read more: Copa Holdings Misses Q4 Earnings Estimates, Down Y/Y)

In a separate development, consolidated traffic (measured in revenue passenger miles or RPMs) for January came in at 1.94 billion, up 6.2% from the year-ago figure. On a year-over-year basis, consolidated capacity (or available seat miles/ASMs) rose 7.5% to 2.33 billion. Meanwhile, load factor declined 100 basis points to 83% as traffic growth was outpaced by capacity expansion.

2. At JetBlue, traffic improved 7.9% year over year to 4.09 billion backed by strong demand for air travel. On a year-over-year basis, capacity (or available seat miles/ASMs) rose 9.9% to 5.09 billion. Load factor contracted 150 bps to 80.4%. JetBlue continues to expect revenue per available seat mile (RASM) in the first quarter of 2019 to either decline 2% or increase up to 1%. (Read more: JetBlue Posts Rise in January Traffic, Load Factor Down)

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

3. At Alaska Air, consolidated traffic increased 2.5% year over year to 4 billion. Also, consolidated capacity inched up 0.9% to 5.28 billion. Consolidated load factor increased 130 basis points year over year to 77.1%. (Read more: Alaska Air's Traffic & Load Factor Increase in January)

4. Delta Air Lines (NYSE:DAL) rewarded its employees worldwide by shelling out $1.3 billion as part of its profit-sharing scheme for 2018. The payout means that each eligible employee gets a 14% bonus of annual pay. Markedly, this is the fifth consecutive year where the carrier has shared profits in excess of $1 billion with its employees. Moreover, it is the second-largest payout in Delta’s history. Employees at this Atlanta, GA-based carrier will also be paid when they volunteer with a 501(c)(3) or an international nonprofit organization. This scheme comes into effect from Apr 1, 2019.

The payment of $1.5 billion, announced in February 2016, takes the top spot in terms of profit-sharing. The company’s stellar performance in 2015, wherein it recorded a whopping $5.9 billion in pre-tax profit (on an adjusted basis), resulted in the bumper payment.

5. Southwest Airlines, which is facing the aforementioned operational crisis, announced that it will pay $544 million to its employees as part of its 2018 profit-sharing plan. This is the 45^th consecutive profit-sharing arrangement at the carrier. The payment, to be made on Mar 15, equates to approximately 10.8% of each employee’s earnings in the year. This is the third-highest profit-sharing payment in the Dallas-based carrier’s history.

Price Performance

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

The table above shows that airline stocks exhibited a mixed trend with respect to price performance in the past week. Over the course of six months, the sector tracker decreased 2.5% despite impressive gains at GOL Linhas (NYSE:GOL) .

What's Next in the Airline Space?

Updates on the ongoing crisis at Southwest Airlines will be eagerly awaited by investors. Investors will also look forward to United Airlines’ presentation at the Barclays (LON:BARC) Industrial Select conference. United Airlines is the wholly-owned subsidiary of United Continental Holdings (NASDAQ:UAL) .

Zacks' Top 10 Stocks for 2019

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