Bank of America Raises Estimates on 4 Airline Co.'s

In a report published Thursday, Bank of America Merrill Lynch analyst Glenn Engel raised estimates and the price objective of four airliners following optimistic company guidance updates.

Engel commented on American Airlines Group

on June Traffic Results. American Airlines reported that June total revenue passenger miles (RPMs) was up one percent year-over-year at $19.9 billion. Total capacity was up 3.2 percent but total passenger load factor fell 1.9 percent compared with June 2013. The release states, "The Company expects its second quarter 2014 consolidated passenger revenue per available seat mile (PRASM) to be up approximately 5.5 percent to 6.5 percent versus the same period last year. In addition, the Company expects its second quarter pre-tax margin (excluding special items) to be approximately 12 percent to 13 percent." Although not as optimistic as

, Glenn Engel raised the price target to $46.00 and maintained a Neutral rating.

On Wednesday, Southwest Airlines

also announced the numbers corresponding to

. Total RPMs increases 2.2 percent year-over year to 10.0 billion. Available seat miles were up 0.9 percent and the load factor totaled 86.1 percent. Passenger revenue per ASM (PRASM) was estimated to be up seven to eight percent. The 8-K filing states, "For the second quarter of 2014, the Company flew 28.6 billion RPMs, compared to 27.9 billion RPMs flown for the same period in 2013, an increase of 2.4 percent. Second quarter ASMs decreased 0.4 percent to 34.1 billion from second quarter 2013 ASMs of 34.2 billion. The second quarter load factor was 83.9 percent, compared to 81.6 percent for the same period in 2013. The Company currently expects the year-over-year increase in second quarter 2014 PRASM to exceed eight percent as compared to second quarter 2013." PRASM gains surpassed Merrill Lynch's estimates by one to two points. The analyst commented, "Domestic business travel, particularly for small businesses, continues to outperform all other segments, and we see above-industry level prasm gains for LUV continuing in 2H14."

Allegiant Travel Company

reported

for the month of June on July 7. June 2015 estimated PRASM change year-over-year came in between 4.6 and 5 percent. Allegeiant sees 6.1 to 6.5 percent PRASM change in the second quarter 2014. The company greatly increased guidance of total unit revenues (TRASM) from 0.5-2.5 percent to 4.6-5 percent. Engel noted, "While Allegiant are historically conservative guiders, the upward revisions to revenue guidance throughout the quarter bode well for other leisure focused carriers (SAVE). We raise our 2QE to $1.83 (street $1.66) from $1.66, and our 2014E to $5.70 (street $6.05) from $5.60."

In an

on Wednesday, United Continental Holdings

reported financial and operational results from the second quarter of 2014. PRASM increased 3.5 percent, mainly due to better-than-expected performance in the Domestic and Pacific regions. The update states, "UAL expects its second-quarter consolidated cost per ASM (“CASM”), excluding profit sharing, fuel, third-party business expense and special charges, to be approximately flat year-over-year. The better than expected cost performance was driven by strong performance on cost savings initiatives and by the timing of certain expenses the Company now expects to incur in the second half of the year." Second quarter non-operating expense is estimated to come in between $140 million and $160 million. United expects $860 million and $880 million of gross capital expenditures in 2Q14. Bank of America Merrill Lynch concluded, "Unlike DAL and AAL, UAL did not raise 2Q prasm guidance during the quarter. UAL also sees 2Q non-fuel unit costs flat yoy vs initial guidance of +1.75%, only some of which is due to expense timing. As a result of the beat, we raise our 2QE to $2.20 (street $1.88) from $1.90, our 2014E to $3.60 (street $3.88) from $3.20, and our PO to $40 from $36. Outside of the seemingly strong June performance, we continue to believe that rising international supply will keep pressure on UAL yields in 2H14 and maintain our Underperform rating."