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Airline Stock Roundup: HA's Traffic Hit by Coronavirus Woes, ALGT's Capacity Cut & More

Maharathi Basu

In the past week, Hawaiian Holdings’ HA wholly owned subsidiary Hawaiian Airlines reported a massive decline in March traffic and load factor (% of seats filled with passengers) as the coronavirus pandemic continued to jeopardize air-travel demand. Also, due to the coronavirus-induced waning travel demand, Latin American carrier LATAM Airlines LTM posted a disappointing significant decline in March traffic.

Moreover, Allegiant Travel Company ALGT, the parent company of Allegiant Air, expects capacity for April and May to plummet in the 80-90% range year over year. Due to the coronavirus-caused turbulence in the airline space, capacity-cut updates  were also available in the previous week.

Meanwhile, Azul’s AZUL cargo business unit registered a 36% increase in first-quarter 2020 revenues. This is a welcoming development as passenger revenues are shrinking in the current scenario due to vanishing air-travel demand.

Highlights of the Past Week’s Top Stories

1.    Hawaiian Airlines’ traffic (measured in revenue passenger miles or RPMs) plunged 40.9% to 851.02 million in March. Meanwhile, capacity (measured in available seat miles or ASMs) declined 11.9% to 1.47 billion in the same period. With traffic declining more than the contraction in capacity, load factor decreased in the month.

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2.    Due to the current crisis, Allegiant expects its daily cash burn between $2 and $2.5 million. In fact, Allegiant is seeking government assistance and trying out other financing alternatives to prop up its balancesheet. Moreover, with cancellations exceeding booking by a margin, the company’s top line is being stressed. In fact, March revenues are likely to have been affected year over year by 40-45%.

3.    SkyWest SKYW became the latest airline to suspend dividends and buybacks until further notice as it applied for financial help under the Coronavirus Aid, Relief and Economic Security (CARES) Act. Meanwhile, the carrier, which will announce first-quarter 2020 results on May 7, expects its scheduled block-hour (a measure of aircraft utilization) production for April to decline roughly 50%.

4.    Copa Holdings CPA like Hawaiian Airlines reported dismal March traffic in double-digit decline due to vanishing air-travel demand.Consolidated traffic plunged 43.4% while capacity declined 35.7%.Load factor declined 990 basis points (bps) to 73.4% as traffic decreased more than the contraction in capacity.

5.    Akin to its peers, LATAM Airlines’ March traffic was dented by the coronavirus effect. System-wide passenger traffic tanked 37.9% while capacity was down27.5%. Alike other March traffic reports, LATAM Airlines’ load factor declined with traffic falling at a faster pace than capacity. Due to the coronavirus-induced travel restrictions, LATAM Airlines carried 33.8% less passengers in March 2020 than a year ago.

Price Performance

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

The table above shows that most stocks have traded in the green over the past week leading to the NYSE ARCA Airline Index gaining 7.4% over the period to $45.85. Over the course of six months, the sector tracker has plummeted 36.8%.

What's Next in the Airline Space?

Updates on the coronavirus relief package for airlines are expected in the coming days.

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Allegiant Travel Company (ALGT) : Free Stock Analysis Report
 
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
 
LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report
 
AZUL SA (AZUL) : Free Stock Analysis Report
 
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