Airline Stock Roundup: United Continental up on Kirby Hire; Delta, Southwest Airlines in Focus

The most eye-catching update of the otherwise news-thin week came from United Continental Holdings UAL when it announced the appointment of Scott Kirby as President- a newly created position at the carrier. The news of the vastly experienced Kirby moving to United Continental from American Airlines Group AAL led to a surge in the former’s stock price.

Apart from the management change, the Dallas, TX-based Southwest Airlines LUV received good news on the labor front when it inked a tentative pay-related deal with its pilots’ union. Moreover, news pertaining to the engine failure of a Southwest Airlines flight from New Orleans to Orlando, FL also invited attention. Additionally, the past week saw an update regarding the Atlanta, GA-based Delta Air Lines’ DAL modernization plans at the Los Angeles International Airport (LAX).

 (Read the last Airline Stock Roundup for Aug 24, 2016).

Recap of the Past Week’s Most Important Stories

1. United Continental announced that Scott Kirby has joined the carrier as President. Kirby has vast experience in the airlines space and his appointment is a prudent move by United Continental as it seeks to turn around its fortunes. At United Continental, Kirby assumes a wide array of responsibilities ranging from overseeing its activities pertaining to marketing, sales, alliances, and network planning along with revenue management (read more: United Continental Hires Scott Kirby as President, Stock Up).

2. Delta’s lease and license agreement to relocate to terminals 2 and 3 from terminals 5 and 6 at LAX received approval from Los Angeles City Council. The carrier plans to invest $1.9 billion for the upgradation purpose. The agreement aims at expanding Delta’s gates at this key hub (read more: LA City Council OKs Delta's $1.9B LAX Modernization Plans).

3. Southwest Airlines inked a tentative agreement with its pilots. The company and the union representing its pilots, Southwest Airlines Pilots' Association, have agreed “in principle” to the terms of this new contract (read more: Southwest Airlines Pilots Agree on Tentative Contract).

On a separate note, a Southwest Airlines flight (3742) made an emergency landing at Pensacola International Airport after the pilot detected an issue with one of its two engines. According to media reports, there were 99 passengers on the plane and five crew members. Luckily no one was injured (read more: Southwest Airplane Suffers Engine Issue En-route to Florida).

4. In a bid to expand further, low-cost carrier JetBlue Airways JBLU plans to initiate operations from Fort Lauderdale-Hollywood to Aruba – a popular Caribbean destination. The service is slated to start from Jan 4, 2017.

5. According to a report appearing in Reuters, the U.S. Department of Transportation on Friday has fined 4 major US carriers including American Airlines and United Continental for inaccurately informing passengers about compensation. According to the report, American Airlines was fined the maximum amount.

 Performance

The following table shows the price movement of the major airline players over the past week and during the last 6 months. 

Company	Past Week	Last 6 months
HA	3.07%	6.55%
UAL	7.35%	-11.96%
GOL	-2.06%	177.27%
DAL	0.49%	-23.46%
JBLU	-0.25%	-28.17%
AAL	2.86%	-10.92%
SAVE	0.81%	-19.95%
LUV	0.82%	-11.35%
VA	-0.32%	84.94%
ALK	-0.07%	-12.57%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table above shows that majority of the airline stocks traded in the green over the past week. Consequently, the NYSE ARCA Airline index increased 1.1% to $89.34 over the past 5 trading days.  Shares of United Continental gained the most (7.35%) driven by the appointment of Scott Kirby.

Over the course of six months, the NYSE ARCA Airline index appreciated 3.77% driven by huge gains at GOL Linhas GOL and Virgin America.

What's Next in the Airline Space?

JetBlue’s flight from Fort Lauderdale to Santa Clara, Cuba will mark the resumption of commercial flights connecting the US and Cuba after more than 50 years. We anticipate further updates on the issue in the coming days. Moreover, August traffic reports from the likes of Delta Air Lines and Alaska Air Group ALK are expected over the next few days.

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