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Airline Stock Roundup: SAVE's Narrower-Than-Expected Q2 Loss, CPA's July Traffic

·4-min read

In the past week, Spirit Airlines SAVE reported a loss for the second quarter of 2022.The loss was, however, narrower than the Zacks Consensus Estimate and also the year-ago loss. Upbeat air-travel demand aided results.

Copa Holdings CPA reported a load factor (% of seats filled by passengers) of 87% for July 2022, higher than the July 2019 (pre-coronavirus level) load factor of 86.6%. Alaska Airlines, the wholly-owned subsidiary of Alaska Air Group ALK received encouraging tidings on the labor front when 5,300 of its workers, represented by the Machinists union, ratified a two-extension to their pay-related contract.

Recap of the Latest Top Stories

1 Spirit Airlines’ second-quarter 2022 loss (excluding 18 cents from non-recurring items) of 30 cents per share was narrower than the Zacks Consensus Estimate and the year-ago quarter’s loss of 34 cents each. In second-quarter 2022, operating revenues of $1,366.6 million surpassed the Zacks Consensus Estimate of $1353.6 million and improved 59% year over year on the back of improving air-travel demand and increased flight volume and higher operating yields. SAVE expects adjusted operating expenses for the third quarter in the range of $1,320-$1,330 million. Adjusted pre-tax margin is expected in the -1 to +1% range. SAVE currently carries a Zacks Rank #3 (Hold).

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

2. Alaska Airlines’ customer service, cargo and ground service employees, and others who are represented by the International Association of Machinists and Aerospace Workers ratified a two-year extension to their contract. The approval ensures wage hikes and other benefits through 2026. Salient features of the contract include higher base wage rates for all classifications in the 8.9-17.4% band, effective Aug 10, 2022. The employees will be eligible for a further 2.5% hike in all base wage rates for all classifications from the same date of 2023. Base wage rate will also increase 2.5% for the following two years. The existing job security clause (amendable on Sep 27, 2026) is extended to Sep 27, 2028.

3. In July, Copa Holdings’ traffic, measured in revenue passenger miles (RPMs), declined 2.7% to 1.9 billion from the comparable period’s level in 2019. The downside was primarily due to coronavirus-induced lower air-travel demand from the pre-pandemic levels. Owing to tepid demand, capacity — measured in available seat miles (ASMs) — fell 3.1% from the 2019 level to 2.19 billion. With traffic declining less than the amount of capacity contraction, load factor improved 40 basis points (bps) to 87% in July 2022.

Copa Holdings was also in the news when it reported better-than-expected second-quarter 2022 earnings per share and revenues. The story was reported in detail in the previous week’s write-up.

4. In line with its decarbonization efforts, United Airlines UAL reportedly made a deposit of $10 million for 100 flying electric taxis from electric vertical take-off and landing (eVTOL) startup company, Archer Aviation. The environmentally-friendly move is in sync with UAL’s intention to enter the air-taxi business.

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 traded in the green over the five trading days. The NYSE ARCA Airline Index increased 3% to $63.58. Over the course of the past six months, the NYSE ARCA Airline Index plummeted 25.2%

What's Next in the Airline Space?

Stay tuned for the usual news updates on this space.


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United Airlines Holdings Inc (UAL) : Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
 
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
 
Spirit Airlines, Inc. (SAVE) : Free Stock Analysis Report
 
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