June 16, 2024

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AAL’s boring Q2 guidance, and disappointing ALGT traffic in April

AAL’s boring Q2 guidance, and disappointing ALGT traffic in April

last week, American Airlines AAL management trimmed its earnings per share forecast for the second quarter of 2024. CEO Robert Isom said the bookings-related weakness was due to changes in the airline’s sales strategy. AAL’s chief commercial officer Vasu Raja, who has been leading the new sales and distribution strategy, is set to step down in June.

Serious travel ALGT reported lackluster traffic numbers for April. United Airlines UAL has also been in the news, thanks to management’s decision to adhere to the second-quarter EPS guidance provided with its first-quarter 2024 results. Latin American Carriers Azul AZUL and Gol Airlines have signed a codeshare agreement to boost the Brazilian aviation market.

A summary of the most important recent stories

1. American Airlines now expects second-quarter adjusted EPS to be in the range of $1-$1.15 (previous guidance was in the range of $1.15-$1.45). Total revenue per available seat mile in the second quarter is now expected to decline in the range of 5-6% from year-ago levels (a 1-3% decline was previously expected). System capacity (measured in available seat miles) is still expected to increase in the range of 7-9% compared to Q2 2023 actuals.

AAL currently carries a Zacks Rank #3 (Hold). you can see The complete list of today’s Zacks #1 #1 (Strong Buy) stocks is here

2. At Allegiant, April scheduled traffic (measured in revenue passenger miles) was down 13% compared to the same month last year. Capacity (measured in available seat miles) for scheduled service fell 11% compared to the April 2023 reading. Load factor (the proportion of seats occupied by passengers) in April 2024 fell to 82.4% from 84.3% a year earlier, as the traffic decline was greater than the capacity contraction.

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Allegiant was also in the news recently when it reported first-quarter 2024 results, which were covered in detail in a previous airline stocks report.

3. United Airlines still expects Q2 2024 earnings per share to be in the $3.75-$4.25 range. The Zacks Consensus Estimate, currently set at $4.02 per share, sits above the middle of the guidance range.

On a separate note, the FAA has allowed UAL to take delivery of new aircraft. UAL was banned from doing so earlier in the year after a series of safety incidents.

4. Azul signed a codeshare agreement with Gol Airlines to connect airline networks across Brazil. Following the agreement, customers will have access to many new local routes as well as obtain many more convenient connectivity opportunities. For example, travelers can fly from Rio de Janeiro to Marabá with a stop in Belem.


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

Zacks Investment Research

Zacks Investment Research

Image source: Zacks Investment Research

The table above shows that most airline stocks traded in the red over the past week. The NYSE ARCA Airline Index fell 1.5% to $58.04. Over the past six months, the NYSE ARCA Airline Index has risen 4.7%.

What’s next in aviation?

As the Q1 2024 earnings season winds down for airlines, the focus will shift back to news updates. Demand for air travel remains booming, as evidenced by the busy Memorial Day weekend. Optimistic forecasts for US airlines indicate that US airlines are likely to be very busy during the upcoming summer season. Hence, updates regarding network expansion by different carriers cannot be ruled out in the coming days.

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United Airlines Holdings Inc (UAL): Free stock analysis report

(AAL): Free stock analysis report

Allegiant Travel (ALGT): Free Stock Analysis Report

AZUL (AZUL): Free Stock Analysis Report

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