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Airline Stock Roundup: Carriers Cancel Flights on Coronavirus Woes, DAL in Focus

Maharathi Basu

In the past week, companies like the U.S.-based American Airlines AAL, the European carrier Ryanair RYAAY and the Latin American LATAM Airlines LTM suspended various flights as the dreaded coronavirus (COVID-19) spread it tentacles beyond its country of origin, China. In fact, this contagious disease now left an impact on every continent barring Antarctica, claiming multiple lives and infecting in larger numbers.

In another coronavirus-related update, United Airlines UAL postponed its investor day. Meanwhile, Spirit Airlines SAVE grabbed headlines as it came out with an expansion-related update. Moreover, Warren Buffett’s Berkshire Hathaway increased its stake in Delta Air Lines DAL.

(Read the Last Airline Stock Roundup here). 

Flashback to Past Week’s Top Stories

1. American Airlines, which already cancelled flights connecting the Dallas-Fort Worth International Airport (DFW) with China and Hong Kong, now suspended flights between DFW and South Korea's Incheon International Airport due to lackluster demand following the coronavirus outbreak. Flights on the Dallas-Seoul route are expected to commence on Apr 25, 2020. The carrier also decided to suspend all U.S. flights to Milan, Italy, again due to this soft air-travel demand induced by the coronavirus. (Read more: American Airlines to Cancel Milan Flights on Coronavirus Woes).

American Airlines carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks (Strong Buy) here.

2. United Airlines deferred its investor day, scheduled to be held on Mar 5, to September due to the plaguing coronavirus scare. Management feels that given the current situation it will not be feasible to have a productive conversation revolving around its long-term strategy. Simultaneously, the carrier cut back flights to Japan, South Korea and Singapore, significantly due to low demand on these routes. The airline reduced approximately two thirds of its flights to Seoul, a third of flights to Japan and 40% of flights to Singapore. (Read more: United Airlines Calls Off Investor Day on Coronavirus Threat).

3. Per a Reuters report, LATAM Airlines announced the cancellation of its daily flight connecting Sao Paulo and Milan through Apr16 due to tepid demand post the coronavirus outbreak. Citing the same reason, Ryanair plans to lower its flight frequency to and from Italy by 25%. Capacity in the airline’s primary market, Italy, will be slashed for the Mar 17-Apr 8 period. However, Ryanair’s flight cancellations will not leave as much an impact as anticipated on its current financial year ending Mar 31.(Read more: Ryanair to Cut Back Flights to Italy Amid Coronavirus Fears).

4 In a bid to expand its international footprint, Spirit Airlines announced that it will include more flights from the Louis Armstrong New Orleans International Airport to two international destinations, namely, Cancun, Mexico and San Pedro Sula, Honduras. While flights connecting New Orleans with Cancun will be operational from Jun 10, 2020 onward, services on the New Orleans-Honduras route will start the following day. (Read more: Spirit Boosts Global Network, Adds Flights From New Orleans).

5. Taking advantage of the sharp depreciation in stock price as the coronavirus persistently wreaks havoc, Warren Buffett, considered one of the greatest (if not the greatest) investors of all times, raised his stake in Delta. Per a Bloomberg report, this Berkshire Hathaway founder and CEO purchased more than 976,000 shares of the airline behemoth for $45.3 million.

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 airline stocks have traded in the red over the past week inducing the NYSE ARCA Airline Index to decline 6.9% to $80.73. Over the course of six months, the sector tracker has inched up 0.6%.

What's Next in the Airline Space?

Investors will await the fourth-quarter 2019 earnings report of Azul AZUL, scheduled to be released on Mar 12. Watch this space for further updates on the coronavirus and its resultant impact on the sector.

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Click to get this free report 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 American Airlines Group Inc. (AAL) : Free Stock Analysis Report Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report LATAM Airlines Group S.A. (LTM) : Free Stock Analysis Report AZUL SA (AZUL) : Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research