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Airline Stock Roundup: Q4 Earnings Reports of AAL, LUV & Others

In the past week, sectoral heavyweights like American Airlines AAL, Southwest Airlines LUV, JetBlue Airways JBLU and Alaska Air Group ALK reported earnings for fourth-quarter 2022. Even though robust air-travel demand boosted the top lines of these airline operators, high-fuel costs limited bottom-line growth.

Fourth-quarter earnings-related updates were discussed in the previous write-up as well.

Recap of the Latest Top Stories

1 American Airlines’ fourth-quarter 2022 earnings (excluding 3 cents from non-recurring items) of $1.17 per share surpassed the Zacks Consensus Estimate of $1.14 despite higher costs. In the year-ago quarter, AAL had incurred a loss of $1.42 per share when air-travel demand was not as buoyant as in the present scenario. The fourth quarter of 2022 was the third consecutive profitable quarter, excluding net special items, at AAL since the onset of the pandemic. Operating revenues of $13,189 million increased 39.9% year over year, reflecting upbeat air-travel demand. Driven by the soaring demand for healthy bookings, management expects first-quarter 2023 total unit revenues to be 24-27% higher than the first-quarter 2022 actuals. AAL currently carries a Zacks Rank #2 (Buy).

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2. Alaska Air Group reported mixed fourth-quarter 2022 results, wherein earnings outperformed the Zacks Consensus Estimate but revenues missed the same. Quarterly earnings of 92 cents per share beat the Zacks Consensus Estimate of 90 cents. The bottom line surged more than 100% year over year.

Reflecting the uptick in air-travel demand, consolidated traffic (measured in revenue passenger miles) rose 14% to 12.85 billion. Consolidated load factor (percentage of seats filled by passengers) increased 6.1 percentage points to 85.5% in the fourth quarter of 2022. Economic fuel price per gallon climbed 57.1% to $3.55. Alaska Air announced plans to resume share repurchases in early 2023. Repurchases are anticipated to be between $75 million and $100 million in 2023.

3. Southwest Airlines reported fourth-quarter 2022 loss of 38 cents per share, wider than the Zacks Consensus Estimate of a loss of 3 cents. In the year-ago reported quarter, LUV had reported earnings of 14 cents per share.

Operational disruptions in late December resulted in more than 16,700 flight cancellations. As a result, LUV had to bear a fourth-quarter pre-tax negative impact of almost $800 million ($620 million on an after-tax basis), which resulted in fourth-quarter 2022 net loss. Revenues of $6,172 million lagged the Zacks Consensus Estimate of $6,270.9 million but improved 22.2% year over year. Management expects first-quarter 2023 operating revenues to grow in the 20-24% band.

4. JetBlue Airways’ fourth-quarter 2022 earnings (excluding 15 cents from non-recurring items) of 22 cents per share beat the Zacks Consensus Estimate of 19 cents. Results were aided by strong air-travel demand. In the year-ago quarter, JBLU incurred a loss of 36 cents per share.  Operating revenues of $2,415 million climbed 31.68% year over year and beat the Zacks Consensus Estimate of $2,407.5 million. Management expects total revenues for first-quarter 2023 to increase in the 28-32% range. The average fuel cost per gallon in the March quarter is estimated to be between $3.20 and $3.35.

Performance

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 past week. However, the losses were muted in nature. As a result, the NYSE ARCA Airline Index remained flat at $63.14 over the past week. Over the course of the past six months, the NYSE ARCA Airline Index has increased 4.2%.

What's Next in the Airline Space?

Fourth-quarter 2022 earnings reports of many more key airline players are expected in a week’s time.

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

JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report

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

Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report

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Zacks Investment Research