The week that went by saw American Airlines Group AAL introduce its Dreamliner 787 service between Dallas and Chicago. The company plans to soon extend the use of these jets manufactured by The Boeing Company BA for international operations as well. The carrier said that Boeing 787-8 Dreamliners will fly effective Jun 2 between Dallas/Fort Worth International Airport and Beijing Capital International Airport.

In addition, companies like Southwest Airlines Co. LUV, JetBlue Airways Corp. JBLU, American Airlines Group and United Continental Holdings, Inc. UAL unveiled their traffic data for Apr 2015.

While Southwest Airlines and JetBlue Airways recorded a healthy rise in traffic for the month, data released by peers United Continental Holdings and American Airlines Group disappointed. Also, taking into account the rise in oil prices, United Continental and American Airlines hauled up their respective forecasts for fuel cost per gallon for the second quarter.

With major carriers having already revealed their first quarter earnings results, there was not much activity on the earnings front. The sole major earnings release over the past five trading days was that of Latin-American carrier GOL Linhas Aereas Inteligentes S.A. GOL. The company revealed a below-par outcome for the quarter, with its loss widening on a year-over-year basis.

The NYSE ARCA Airline index gained a moderate 1.61% over the past five trading days.

(Read the last Airline Stock Roundup for May 6, 2015)   

Recap of the Past Week’s Most Important Stories

1. In a bid to improve customer satisfaction, American Airlines Group has started offering Dreamliner 787 service between Dallas and Chicago. With features such as improved aerodynamics, advanced engine technology, fully lie-flat Business Class seats and satellite Wi-Fi capability, the jet will boost customer service and convenience for the carrier, in turn attracting more fliers (read more: American Airlines Next to Add Dreamliner 787).

Furthermore, American Airlines, while unveiling its traffic numbers for the month of April, stated that due to the recent upward movement in oil prices, it expects to shell out more for fuel per gallon in the second quarter of 2015 than estimated previously (read more: American Airlines Group April Traffic Dips, Fuel Cost to Rise).

2. United Continental Holdings reported a marginal year-over-year increase in air traffic – measured in revenue passenger miles or RPMs – for April. The company too expects to pay more in fuel costs per gallon in the second quarter in view of rising oil prices (read more: United Continental April Traffic Up)

3. JetBlue Airways unveiled healthy traffic data for the month of April on the back of increased travel demand. Traffic – measured in revenue passenger miles – came in at 3.46 million, up 9% year over year. On a year-over-year basis, capacity climbed 6.6% to 4.04 million in Apr 2015. Load factor (percentage of seats filled by passengers) improved 180 basis points to 85.7% on the back of a greater increase in RPMs compared to capacity. The company registered a completion factor of 99.4%, with 80.4% of flights on schedule. We expect the carrier to deliver healthy traffic growth in the coming months as well.

4. April air traffic at Southwest Airlines improved 8.6% on a 6.7% rise in capacity. Another important metric, load factor, improved 140 basis points to 83.1%. Passenger revenue per available seat mile (a measure of unit revenue) decreased 2% for the month on a year-over-year basis (read more: Southwest Airlines Continues to Gain on April Traffic Growth).

5. GOL Linhas reported first-quarter 2015 net loss of R$672.7 million (approximately $236.6 million), significantly wider than the year-ago loss of R$96.1 million (about $40.7 million). Net revenue increased 0.5% year over year to R$2,505.2 million (approximately $881 million). Increased demand and load factor in addition to the company’s efforts to enhance service for its customers accounted for the year-over-year growth.

Passenger revenues grossed R$2,227.5 million ($783.4 million) while cargo revenues totaled R$277.8 million ($97.7 million). For 2015, the company expects no variation in domestic supply. Operating margin for 2015 is projected in the range of 2% to 5%.

Performance

The following table shows the price movement of the major airline players over the past week and during the last 6 months. 

Company

Past Week

Last 6 months

HA

3.76%

36.46%

UAL

0.75%

13.3%

GOL

-1.16%

-50.29%

DAL

0.96%

6.22%

JBLU

0.7%

73.26%

AAL

3.8%

11.17%

SAVE

-2.72%

-13.73%

LUV

4.24%

7.32%

CPA

-16.81%

-18.4%

ALK

-0.18%

16.04%

As the chart above suggests, even though most airline stocks traded in the green over the past week, the gains were somewhat subdued in nature. Shares of Southwest Airlines appreciated the most gaining 4.24% on the back of healthy traffic data for April.

On the other hand, shares of Copa Holdings SA CPA suffered the most, losing 16.81% over the past week. Meanwhile, most of the stocks have gained over the last six months, with JetBlue witnessing the highest upside (73.26%) during the period. 

What’s Next in the Airline Biz?

With the first quarter earnings season over, stay tuned for usual news updates in the space. Focus, in particular, will remain on the price movement of airline stocks, given the volatile nature of oil prices lately.

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SOUTHWEST AIR (LUV): Free Stock Analysis Report
 
BOEING CO (BA): Free Stock Analysis Report
 
JETBLUE AIRWAYS (JBLU): Free Stock Analysis Report
 
GOL LINHAS-ADR (GOL): Free Stock Analysis Report
 
UNITED CONT HLD (UAL): Free Stock Analysis Report
 
COPA HLDGS SA-A (CPA): Free Stock Analysis Report
 
AMER AIRLINES (AAL): Free Stock Analysis Report
 
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