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Airline Stock Roundup: RYAAY's Rosy August Traffic, UAL's Upbeat 3Q Revenue View

In the past week, Ryanair Holdings RYAAY has posted buoyant traffic data for August, driven by a strong air-travel demand scenario. Latin-American carrier Gol Linhas GOL also reported August traffic numbers. Load factor (% of seats filled by passengers) improved at Gol, with traffic increase outpacing capacity growth.

With air-travel demand upbeat in the United States as well, United Airlines UAL upped its revenue growth guidance for third-quarter 2022. The carrier was also in the news after reportedly threatening to end its operations at the New York's John F. Kennedy Airport from October if the Federal Aviation Administration does not approve its request to operate more flights at JFK.

Recap of the Latest Top Stories

1.Owing to buoyant air-travel demand, United Airlines now anticipates total operating revenues to grow almost 12% from the September-quarter level of 2019. The estimate is higher than the prior expected growth rate of about 11%. UAL is seeing a steady recovery in domestic and leisure air-travel demand. Recovery in business travel demand also picked up the pace. Against this rosy backdrop, UAL expects to be profitable in the third quarter alike the second quarter of 2022.

United Airlines, currently carrying a Zacks Rank #3 (Hold), expects total revenue per available seat mile (TRASM) to increase around 25% in the third quarter from the third-quarter 2019 actuals (previous view: up in 24-26% band). Consolidated unit cost or cost per available seat mile (CASM), excluding fuel, third-party business expenses, profit-sharing and special charges, is anticipated to increase roughly 16% in the September quarter from the corresponding 2019 levels (previous view: 16-17%). Adjusted operating margin is expected to be approximately 10.5% in the September quarter, higher than the prior guidance of 10%. Capacity is now expected to decrease in the 10-11% range (earlier guidance was for an 11% decrease). UAL now forecasts the average fuel price per gallon to be $3.83 in the third quarter (previous view: $3.81).

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

2. In August, RYAAY flew 16.9 million passengers, the highest ever traffic volume at RYAAY in the said month. Last August, only 11.1 million passengers were transported by RYAAY. Load factor increased to 96% from 82% in August 2021. The number of passengers attracted by RYAAY in August 2022 was 14.2% higher than the 14.9 million passengers flown in August 2019 (pre-coronavirus era).

3. In August, Gol Linhas’ consolidated traffic increased 46.3% year over year. To match the increased demand situation, GOL is expanding its capacity. In the same month, capacity grew 43.9% year over year. Since traffic growth was more than capacity expansion, load factor improved 1.3 percentage points (p.p) to 81.5% last month.

Upbeat traffic in its domestic markets is leading to a bullish scenario on a consolidated basis. In August, domestic traffic and capacity improved 31.7% and 29.7%, respectively. On the domestic front, 45.1% more passengers boarded GOL’s flights last month.

4. Delta Air Lines DAL entered into an agreement with hydrogen and biogenic-based fuel developer DG Fuels in an environmentally-friendly move. The deal is aimed at accelerating the production of sustainable aviation fuel (SAF), which is currently at a nascent stage.

Per the agreement, DG Fuels will supply Delta with 385 million gallons of unblended sustainable aviation fuel from 2027-end. The amount will be spread equally over seven years i.e., 55 million is expected to be delivered annually over seven years. The usage of SAF by Delta is expected to bring down lifecycle greenhouse gas emissions by 75-85% compared to the emission-reduction level of conventional jet fuel.

Delta was also in the news recently when its management announced that it will operate additional flights for CES 2023 to Las Vegas (host of the tech event, scheduled to be held from Jan 5 to Jan 8) from 16 cities in the United States apart from three of its international hubs. The news was reported in detail in the previous week’s write-up.

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 almost all airline stocks have traded in the green over the past five trading days. The NYSE ARCA Airline Index has increased 3% to $60.94. Over the past six months, the NYSE ARCA Airline Index has plummeted 13%.

What's Next in the Airline Space?

Stay tuned for the usual news updates on this space.


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Ryanair Holdings PLC (RYAAY) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
 
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
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