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UBS Cautious Into Airliners' Q1

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UBS said its first quarter EPS estimate for airlines are below consensus. It also noted it will be difficult for airline stocks to maintain their upward momentum through preliminary first quarter results beginning with Delta Air Lines, Inc. (NYSE: DAL) on Monday.

Analyst Darryl Genovesi, citing Revenue Edge airfare tracker, estimate that agency bookings through march 27 imply about 7 percent decline in Q1 industry wide unit revenue (PRASM), unchanged from prior look and near the low-end of the U.S. 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.

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, Genovesi enjoys a success rate of 77 percent with an average return of +16 percent.

Following are the price movements of various airline stocks today:

  • Delta Airlines were down 3.3 percent at $47.05.
  • United Continental Holdings Inc (NYSE: UAL) down 4.44 percent at $57.20
  • American Airlines Group Inc (NASDAQ: AAL) fell 3.88 percent to $39.42.
  • Southwest Airlines Co (NYSE: LUV) declined 1.47 percent to $44.14.
  • JetBlue Airways Corporation (NASDAQ: JBLU) were up 0.71 percent at $21.27.
  • Virgin America Inc (NASDAQ: VA) down 0.10 percent at $38.52.
  • Hawaiian Holdings, Inc. (NASDAQ: HA) slipped 3 percent to $45.70.
  • Spirit Airlines Incorporated (NASDAQ: SAVE) dropped about 2 percent to $47.06.
  • Allegiant Travel Company (NASDAQ: ALGT) fell 2 percent to $174.75.

Latest Ratings for AAL

DateFirmActionFromTo
Feb 2021Deutsche BankUpgradesHoldBuy
Feb 2021Seaport GlobalDowngradesBuyNeutral
Jan 2021SusquehannaMaintainsNegative

View More Analyst Ratings for AAL
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Related Articles (ALGT + AAL)

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Posted-In: Darryl Genovesi UBSAnalyst Color News Analyst Ratings

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IRIXRoth CapitalMaintains9.0
AMRSRoth CapitalMaintains33.0
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