UBS Cautious Into Airliners' First Quarter, Shares Down

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Airline stocks are lower after UBS said its first quarter EPS estimate for airlines are below consensus. It also noted that it will be difficult for airline stocks to maintain their upward momentum through preliminary first quarter results beginning with Delta Air Lines, Inc.
DAL
on Monday. Analyst Darryl Genovesi, citing Revenue Edge airfare tracker, estimate that agency bookings through Sunday 3/27 imply about 7% decline in Q1 industry wide unit revenue (PRASM), unchanged from prior look and near the low-end of the US airlines' aggregate guidance range. "We forecast a ~6% PRASM decline in the month of March, followed by a ~7% decline in April, both unchanged from our prior view. Combined March/April PRASM appears to be tracking 6-7% lower y/y, back in line with January trend following very weak February, in which industry PRASM appears to have declined ~9% (partially on weather)," Genovesi wrote in a note to clients. Looking ahead, Genovesi said: "We would expect close-in yield strength in early April when Easter shift drives higher business travel mix while prior-year yield and PRASM comparisons ease significantly over the next few months." "In particular, we would expect better domestic booking trends beginning in late May or early June as unfavorable changes to legacy airline pricing strategy kicked in around that time in 2015." According to TipRanks, Darryl Genovesi is ranked 638 out of 3,840 analysts, and enjoys a success rate of 77 percent with an average return of +16 percent. Following are the price movements of various airline stocks: Delta Airlines were down 3.3 percent at $47.05. United Continental Holdings Inc
UAL
down 4.44 percent at $57.20 American Airlines Group Inc
AAL
fell 3.88 percent to $39.42. Southwest Airlines Co
LUV
declined 1.47 percent to $44.14. JetBlue Airways Corporation
JBLU
were up 0.71 percent at $21.27. Virgin America Inc
VA
down 0.10 percent at $38.52. Hawaiian Holdings, Inc.
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HA
slipped 3 percent to $45.70. Spirit Airlines Incorporated
SAVE
dropped about 2 percent to $47.06. Allegiant Travel Company
ALGT
fell 2 percent to $174.75.
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Posted In: Analyst ColorNewsAnalyst RatingsAirlinesIndustrials
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