Airline Stock Roundup: Travel Ban Policy Partially OK'd; American Airlines & Delta In Focus

There were quite a few developments in the airline space last week. Gulf carrier Qatar Airways’ intention to buy a 10% stake in American Airlines Group (NASDAQ:AAL) and the latter’s lukewarm response drew a lot of attention. Another eye-catching update pertained to the U.S. Supreme Court’s partially favorable ruling on President Donald Trump’s travel ban policy.

Delta Air Lines (NYSE:DAL) also grabbed headlines by virtue of its joint venture with Korean Air Lines as the former aims to expand its Asian footprint. The past week also saw an expansion-related update from Southwest Airlines (NYSE:LUV) .

On the price front, the NYSE ARCA Airline Index was almost flat at $114.54 over the past five trading sessions.

Transportation - Airline Industry 5YR % Return

Transportation - Airline Industry 5YR % Return

(Read the last Airline Stock Roundup for Jun 21, 2017).

Recap of the Past Week’s Most Important Stories

1. In a regulatory filing released by American Airlines, Qatar Airways’ proposed purchase of 10% of the airline’s shares equals a roughly $808 million investment. The offer did not get a favorable response from the Fort Worth, TX-based carrier with its CEO Doug Parker finding the Gulf carrier’s overture “puzzling” (read more: American Airlines Climbs Higher as Qatar Airways Looks to Buy 10% Stake).

2. In what can be seen as a victory for the Trump administration, the U.S. Supreme Court has reinstated major parts of the President’s travel ban. The court however said that the travel ban will be up for review in October. The ruling hurt most airline stocks due to fears of declining travel demand (read more: Travel Ban Partially OK'd: What's in Store for Airlines?).

3. Delta Air Lines and Korean Air Lines Co., Ltd. have agreed to create a leading trans-Pacific joint venture connecting the U.S. and Asia. The joint venture will offer an expanded network, industry-leading products and services plus an enhanced customer experience (read more: Delta Air Lines & Korean Air Ink Trans-Pacific Joint Venture).

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

4. In a bid to expand its footprint, Dallas-based low-cost carrier Southwest Airlines announced that it will launch nonstop flights connecting Tampa, FL and San Diego. The carrier intends to start operations on the route Jan 8, 2018 onward (read more: Southwest Airlines to Expand Via San Diego-Tampa Route).

5. In a passenger-friendly move, United Airlines, the wholly owned subsidiary of United Continental Holdings (NYSE:UAL) , is looking to improve the experience of passengers at the Houston George Bush Intercontinental Airport. The move, which will become operational from Oct 29, 2017, is aimed at improving connectivity as well as using roughly 90 United Airlines gates at the airport more efficiently.

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 the majority of airline stocks traded in the green over the past week. However, the gains were muted in nature. Shares of Delta gained the most (2.1%) while GOL Linhas (NYSE:GOL) was as the biggest laggard (3.2%)

Over the course of six months, the NYSE ARCA Airline Index appreciated 1.51% on the back of impressive gains at Latin American carriers GOL Linhas and Copa Holdings (NYSE:CPA) . Shares of Hawaiian Holdings (NASDAQ:HA) depreciated the most (21.56%).

What's Next in the Airline Space?

We expect June traffic reports from the likes of Delta in the coming days.

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