Airline Stock Roundup: February Airfares Pocket-Friendly; Spirit Airlines' Labor Update, GOL's Traffic in Focus

The past week saw the Bureau of Transportation Services (BTS) revealing customer-friendly data on airfares for the month of February. According to the employment data for passenger airlines, there was a substantial year-over-year increase in full-time equivalent FTE employment for January this year.

Furthermore, low-cost carrier Spirit Airlines SAVE was in the headlines owing to the tentative agreement inked with its flight attendants' union. Meanwhile, Brazilian carrier GOL Linhas Aéreas Inteligentes S.A. GOL continued to disappoint, revealing lackluster February traffic numbers. Alaska Airlines, a wholly owned subsidiary of Alaska Air Group ALK, was also in the news last week on the back of a couple of customer-friendly announcements.

On the price front, the NYSE ARCA Airline index gained 3.58% over the past week to $90.06.

Read the last Airline Stock Roundup for Mar16, 2016.

Recap of the Past Week's Most Important Stories

1. It seems there is no end to troubles for GOL Linhas. The carrier, plagued by weak economic conditions and currency headwinds, reported dismal February traffic numbers with all three important metrics viz. traffic, capacity and load factor moving south (read more GOL Linhas February Traffic Falls 5%, Capacity Declines). 

2.  Air fares declined 1.8% (on an unadjusted basis) in Feb 2016 primarily due to intense competition in key markets, mainly among low-cost carriers. We believe air fares will decline further in 2016 with oil prices expected to remain weak despite the recent rally (read more: February Airfares Decline, Excessive Competition a Reason).

3. Spirit Airlines inked a tentative five-year agreement with the union (Association of Flight Attendants or AFA) representing its flight attendants. The provisional agreement with AFA pertains to the wages and other benefits of 2,200+ flight attendants of the carrier who fall under the umbrella of the union (read more: Spirit Airlines Inks Tentative Labor Deal: Ratification to Follow?).

4. In a customer-friendly move, Alaska Airlines has started operating daily flights connecting Orange County and Santa Rosa apart from Reno/Tahoe. The introduction of the two new routes is part of the carrier's constant efforts to expand. Horizon Air, another subsidiary of Alaska Air Group, is responsible for operating the flights through its 76- seater Q400 aircraft. In another customer-friendly move, Alaska Airlines announced that its frequent fliers have the option of redeeming 10,000 miles to waive the application fee of $85 for five years of hassle-free travel with TSA Precheck. The offer runs through Apr 30, 2016. Alaska Airlines is the first carrier to come up with such an offer for frequent fliers.

5. According to data released by the Bureau of Transportation Statistics, there was a 4.1% increase in the number of workers employed by U.S. scheduled passenger airlines. This marked the 26^th consecutive month of year-over-year increase. The report also stated that the number of FTEs (402,204) for Jan 2016 was the highest since Aug 2008. According to the update, the most number of FTEs in the month were employed by the American Airlines Group AAL among the network airlines. Southwest Airlines LUV took the honors in the low-cost carrier category.

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	-0.20%	91.28%
UAL	4.12%	5.07%
GOL	13.70%	-12.50%
DAL	2.76%	7.88%
JBLU	-0.44%	-23.42%
AAL	2.74%	5.54%
SAVE	2.62%	-1.11%
LUV	1.90%	17.65%
CPA	5.19%	12.84%
ALK	2.15%	4.59%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The table above shows that most airline stocks traded in the green over the past week with shares of GOL Linhas gaining the most (13.7%). Over six months as well, most airline stocks gained with the NYSE ARCA Airline index up 0.87%. Shares of Hawaiian Holdings HA appreciated the most (91.28%) during the period.

What's Next in the Airline Biz?

With carriers like Southwest Airlines and United Continental Holdings UAL stepping up their efforts to get permission from the U.S. Department of Transportation for flying to Cuba, we expect further updates on the issue in the coming days. With most carriers down in pre-market trading following the Belgium terror attacks earlier today, we expect further updates on the impact of the attacks on airline stocks in the coming days.

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SOUTHWEST AIR LUV: Free Stock Analysis Report
 
GOL LINHAS-ADR GOL: Free Stock Analysis Report
 
HAWAIIAN HLDGS HA: Free Stock Analysis Report
 
ALASKA AIR GRP ALK: Free Stock Analysis Report
 
UNITED CONT HLD UAL: Free Stock Analysis Report
 
SPIRIT AIRLINES SAVE: Free Stock Analysis Report
 
AMER AIRLINES AAL: Free Stock Analysis Report
 
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