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Airline Stock Roundup: AZUL Posts Wider Q1 Loss, LUV & ALGT in focus

In the past week, Azul AZUL reported a wider-than-expected loss per share and lower-than-expected revenues for first-quarter 2023 mainly due to high fuel costs. First-quarter earnings of another Latin American carrier, Copa Holdings CPA, were discussed in the previous write-up.

The labor trouble at Southwest Airlines LUV is unlikely to end soon, with its pilots voting in favor of a strike, citing the company’s inaction as the reason for their move. Meanwhile, Allegiant Travel Company ALGT carried 0.3% fewer passengers year over year on its scheduled flights in April.

Recap of the Latest Top Stories

1. Azul, currently carrying a Zacks Rank #3 (Hold), incurred a loss (excluding 55 cents from non-recurring items) of 99 cents per share in the first quarter of 2023, wider than the Zacks Consensus Estimate of a loss of 42 cents.

Total revenues of $862.1 million missed the Zacks Consensus Estimate of $930.9 million but increased 41.1% year over year as air-travel demand has improved. With more people taking to the skies, Azul’s passenger revenues, contributing 93.1% to the top line, jumped 46.7% year over year (on higher total capacity). Cargo and other revenues declined 11.9% year over year. Management expects an EBITDA of R$5.5 billion for the current year. Capacity is expected to increase 14% for 2023 from the 2022 actuals.

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

2. Southwest Airlines’ pilots have overwhelmingly voted in favor of a strike. This heightened labor-related tensions for the Dallas-based company. Per the Southwest Pilots Association, the voting procedure (whose duration was more than a week) saw 98% of the total pilots cast their votes. Of them, 99% of pilots voted in favor of a strike.

Even though pilots have voted in favor of a strike, it is highly doubtful that the same will materialize eventually, as the law makes it extremely difficult. Therefore, negotiations are likely to continue. The union hopes that this strike approval will exert pressure on the airline in the ongoing negotiations. However, the union has assured that scheduled operations will not be impacted.

3. In April 2023, revenue passenger miles (a measure of traffic) and available seat miles (a measure of capacity) increased 1% and 2.1%, respectively, from the year-ago levels, at ALGT. Also, scheduled departures increased 1.1% year over year. However, the load factor (percentage of seats filled by passengers) decreased 1 point to 84.3% in April 2023, as the traffic increase was less than the capacity expansion.

Capacity increased 2.5% from the year-ago month’s reading for the total system. Departures (systemwide) improved 1.5% from the April 2022 actuals. The estimated average fuel cost per gallon for April was $2.84 (systemwide).


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


Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research


The table above shows that most airline stocks traded in the red over the last five trading days. Despite that, the NYSE ARCA Airline Index increased 6.3 to $62.76%, mainly owing to the significant price appreciation at Copa Holdings following its stellar first-quarter results on May 10. Over the course of the past six months, the NYSE ARCA Airline Index gained 3.3%.

What's Next in the Airline Space?

Stay tuned for usual news updates.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Southwest Airlines Co. (LUV) : Free Stock Analysis Report

Copa Holdings, S.A. (CPA) : Free Stock Analysis Report

Allegiant Travel Company (ALGT) : Free Stock Analysis Report

AZUL (AZUL) : Free Stock Analysis Report

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