Airline Stock Roundup: Q4 Earnings Reports of SKYW, ALGT & HA, DAL in Focus
In the past week, the likes of Allegiant Travel Company ALGT, SkyWest SKYW and Hawaiian Holdings HA 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. An expansion-related update from Delta Air Lines DAL was also available in the past week.
Recap of the Latest Top Stories
1 Allegiant Travel, currently carrying a Zacks Rank #3 (Hold), reported fourth-quarter 2022 earnings (excluding 30 cents from non-recurring items) of $3.17 per share, outperforming the Zacks Consensus Estimate of 79 cents per share. The company had reported earnings of $1.18 per share a year ago. Buoyant demand for air travel along with operational improvements supported the earnings uptick.
Operating revenues of $611.55 million beat the Zacks Consensus Estimate of $578.32 million and increased 23% on a year-over-year basis. Passenger revenues, which accounted for the bulk (92.6%) of the top line, increased around 25% on a year-over-year basis. Management expects earnings per share for the current year to be in the $5.00-$9.00 range.
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2. In fourth-quarter 2022, SkyWest reported break-even earnings (excluding 93 cents from non-recurring items), missing the Zacks Consensus Estimate of 8 cents. The bottom line also decreased 100% year over year due to lower revenues. Revenues of $681.25 million missed the Zacks Consensus Estimate of $704.19 million and slipped 12% year over year. The decrease in overall revenues was due to a $4 million reduction in contract and prorate revenues in addition to a $92 million decrease caused by revenue deferrals. SKYW ended the quarter with a long-term debt of 3.4 billion, up from the 3.1 billion reported a year ago.
3. Hawaiian Holdings’ fourth-quarter 2022 loss (excluding 49 cents from non-recurring items) of 49 cents per share was narrower than the Zacks Consensus Estimate of a loss of 71 cents. HA had incurred a loss of $1.37 in the year-ago quarter. Quarterly revenues of $731 million climbed 47.8% year over year but missed the Zacks Consensus Estimate of $737.6 million.
Passenger revenues (contributing 89% to the top line) increased marginally to $650.8 million from fourth-quarter 2019 actuals. Scheduled airline traffic, measured in revenue passenger miles, declined 11.9% from fourth-quarter 2019 actuals to 3,982.7 million in the quarter under review. Scheduled capacity (measured in available seat miles) declined 5.9% to 4,931.7 million from the December quarter of 2019. Scheduled load factor (percentage of seats filled by passengers) deteriorated 5.4 points to 80.8% in the reported quarter as traffic decline was more than capacity reduction. Passenger revenue per ASM (PRASM) rose 6.7% to 13.20 cents. Yield (scheduled) increased 16.3% from fourth-quarter 2019 actuals.
Operating revenue per ASM (RASM) in first-quarter 2023 is expected to increase year over year in the 7.5-10.5% range. Capacity (or ASMs) is anticipated to increase 14% to 17% from the first-quarter 2022 level. Costs per ASM (excluding fuel & non-recurring items) are expected to be down 1% to up 2% from the first-quarter 2022 level.
Gallons of jet fuel consumed are expected to increase 17-20% from first-quarter 2022 level. The effective tax rate is anticipated to be around 21% during the first quarter of 2023. Fuel price per gallon is expected to be $3.10 for first-quarter 2023.
For full-year 2023, the company projects capital expenditures of approximately $330 to $380 million. Capacity is anticipated to increase between 9.5% and 12.5%. Costs per ASM (excluding fuel & non-recurring items) are expected to move up in the 1-5 % band. Gallons of jet fuel consumed are expected to increase 10.5-13.5%. Fuel price per gallon for the current year is anticipated to be $2.92.
4. In a bid to expand its network in Texas, Delta will commence operations at the Los Angeles International Airport and New York's LaGuardia Airport from Love Field from Jun 5. Flights to Los Angeles and New York will operate twice a day. Delta will operate more flights to Atlanta, currently the sole destination served by DAL from Love Field. Specifically, DAL will operate five daily flights to Atlanta from Jun 5, as opposed to up to four daily flights currently.
The following table shows the price movement of the major airline players over the past week and during the last six months.
Image Source: Zacks Investment Research
The table above shows that most airline stocks have traded in the green over the five trading days. The NYSE ARCA Airline Index has increased 4.6% to $64.96. Over the course of the past six months, the NYSE ARCA Airline Index has inched up 1.5%.
What's Next in the Airline Space?
The fourth-quarter earnings reports from other carriers are scheduled to be out in the coming days.
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Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
Hawaiian Holdings, Inc. (HA) : Free Stock Analysis Report
Allegiant Travel Company (ALGT) : Free Stock Analysis Report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
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