Airline Stock Roundup: LTM's 2019 View, Expansion Updates from UAL, SAVE & ALK

Latin American carrier — LATAM Airlines Group S.A. LTM — unveiled its guidance for the next year, in the past week, which was a day short of trading due to the Christmas holiday.

Additionally, the past week, saw Spirit Airlines SAVE, United Airlines — the wholly owned subsidiary of United Continental Holdings UAL and Alaska Airlines — the wholly owned subsidiary of Alaska Air Group ALK revealing updates in line with their objective to expand operations. Delta Air Lines DAL was also in the news courtesy of its announcement that it has bettered the record, established in 2017, of 242 days without cancelling a mainline flight.

On the price front, the NYSE ARCA Airline Index declined 8% in the past week, courtesy of struggles in the U.S. equity markets.

(Read the last Airline Stock Roundup here)

Recap of the Past Week’s Most Important Stories

1. Alaska Airlines has begun a new nonstop service connecting Sacramento International Airport with Ellison Onizuka Kona International Airport at Keahole on the Hawaiian Island. The latest service will be operational thrice a week and complement the already existing nonstop service between Sacramento and Maui, Hawaii. The flights aimed at enhancing travel during the holidays are anticipated to draw substantial traffic and in turn boost the carrier’s passenger revenues (read more: Alaska Airlines Adds Routes Connecting Sacramento to Hawaii).

2. Spirit Airlines launched non-stop flights, connecting Fort Lauderdale-Hollywood International Airport to Alfonso Bonilla Aragón International Airport at Cali in Columbia. The flights are operational since Dec 20 on a daily basis. Aided by strong demand in this route, the new flights are anticipated to draw substantial traffic and in turn boost the company’s passenger revenues. Apart from boosting connectivity with South Florida, this non-stop service to Cali also provides an opportunity for its citizens to explore more destinations in the United States (read more: Spirit Airlines Initiates Flight Services to Cali).

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

3. United Airlines has announced 11 new services from its hubs in Chicago, Houston, Los Angeles and Washington, D.C. The Chicago, IL-based airline will begin weekend operations to Colorado, Florida and Oregon. Additionally, it will introduce daily flights to Nova Scotia from Jun 6 (read more: United Airlines to Offer Extra Services From Key Hubs).

4. LATAM Airlines expects 2019 operating margin between 7% and 9%, compared with the 2018 operating margin projection between 6.5% and 8%. Available Seat Kilometres (measure of a flight’s passenger carrying capacity) are projected to grow year over year in the 4-6% range, the 2018 estimate for the metric’s growth stands at 5%. Similarly, Available Tonne Kilometres are projected to increase in the 1-3% range, the 2018 estimate for the metric’s growth stands at 4%. Fuel price per barrel is estimated to be $80.

5. Regional carrier SkyWest SKYW has inked a deal to sell its subsidiary — ExpressJet Airlines — to United Airlines joint venture ManaAir LLC. The transactionis expected to close early next year. The deal, valued at $70 million, covers the majority of ExpressJet Airlines’assets and the assumption of its liabilities. SkyWest will utilize or liquidate those assets of ExpressJet,which are excluded from the transaction. SkyWest will lease 20 CRJ200s to ExpressJet for up to five years under the terms of the deal.

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 all airline stocks, barring GOL Linhas Aéreas Inteligentes GOL, traded in the red over the past week as the decline in oil prices were overshadowed by a plethora of factors like the recent rate hike, conflicting news related to trade war between the United States and China and concerns of a global economic slowdown.

Over the course of six months, the sector tracker declined 12% despite impressive gains at the likes of GOL Linhas and Spirit Airlines

What's Next in the Airline Space?

Stay tuned for usual news updates in the space.

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SkyWest, Inc. (SKYW) : Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
United Continental Holdings, Inc. (UAL) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
 
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LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report
 
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