Airline Stock Roundup: JBLU’s Upbeat Q3 Traffic Forecast, AZUL, UAL in Focus – September 22, 2022

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In the past week, JetBlue Airways’ (JBLU Free Report) management lifted its forecast for third-quarter 2022 as air-travel demand continues to be buoyant. Latin American carrier, Azul (AZUL Free Report) was also in the news owing to its fleet-modernization efforts.

United Airlines (UAL Free Report) grounded 25 Boeing 777-200 jets due to lack of adequate inspections. Pilots at Horizon Air, the wholly-owned subsidiary of Alaska Air Group (ALK Free Report) , ratified an agreement aimed primarily at retaining skilled pilots.

Recap of the Latest Top Stories

1 JetBlue, currently carrying a Zacks Rank #3 (Hold), expects revenue per available seat mile (RPMs: a measure of air traffic) for the September quarter to increase in the 22-24% band from the third-quarter 2019 actuals (earlier guidance: increase in the 19-23% range). Owing to a strong completion factor (% of scheduled flights that are completed) and improved reliability, JBLU’s capacity guidance for the September quarter is better than the earlier expectation. JetBlue now expects available seat miles (a measure of capacity) to vary from (0.5%) to 0.5% (earlier guidance: flat with or decrease up to 3% from third-quarter 2019 actuals).

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

2. Per a Reuters report, United Airlines canceled 25 Boeing 777-200 airplanes from service this week because of failure to complete the required inspections on the wing leading-edge panels. UAL had already reported the issue to the Federal Aviation Administration through an internal audit, after which it was planned to conduct the inspections.

The airline completed inspecting 10 aircraft and is coordinating with the FAA to complete the remaining. We remind investors that United Airlines’ Boeing 777 jets, powered by Pratt & Whitney 4000 engines, had been grounded after a Honolulu-bound flight suffered an engine failure in February 2021 and made an emergency landing at the Denver International Airport following an explosion of the engine debris that rained on Denver suburbs. However, no one suffered injuries and the aircraft landed safely.

.3. The 700 plus pilots at Horizon Air, represented by the International Brotherhood of Teamsters (IBT), voted to ratify a new agreement. The new deal covers provisions related to pay-hikes and retirement benefits among other facilities.  Joe Sprague, president of Horizon Air, stated, “We are focused on making Horizon the regional carrier of choice for pilots, and this agreement positions us well. I’m grateful to our pilots and to our colleagues at the IBT for their collaboration and hard work in getting to this point. Together, we are positioning Horizon for a strong future.”

4. Azul announced that it has taken delivery of its first Airbus 350 jet. The plane can accommodate 334 customers. It consumes 20% less fuel per seat. The jet will now aim at completing the certification procedure from the Brazilian regulation agencies. Azul aims to operate two new generation Airbus A350 jets by year-end. They will replace two older generation A330CEO jets.  

Azul was also in the news recently when it reported upbeat traffic numbers for August. The story was reported in detail in the previous week’s write-up.

Performance

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 red over the five trading days. The NYSE ARCA Airline Index has decreased 2.2% to $56.84. Over the past six months, the NYSE ARCA Airline Index has plummeted 24.1%..

What’s Next in the Airline Space?

Stay tuned for the usual updates on this space.

 

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