Bulletin
Investor Alert

Sept. 8, 2022, 8:11 a.m. EDT

Here’s why airline stocks are taking off this week

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    United Airlines Holdings Inc. (UAL)
  • X
    American Airlines Group Inc. (AAL)
  • X
    Delta Air Lines Inc. (DAL)

or Cancel Already have a watchlist? Log In

By Claudia Assis

Airline stocks outperformed the broader equity market on Wednesday, getting a boost from a rosier outlook for United Airlines Holdings Inc. and news that U.S. airports recently welcomed more travelers than they had before the pandemic.

United /zigman2/quotes/205037281/composite UAL -4.05% earlier Wednesday raised its third-quarter revenue growth outlook, thanks to “strong” demand at the end of a “robust” summer. United expects revenue to be about 12% above the same period in pre-pandemic 2019, compared with previous growth guidance of about 11%.

United’s changes were “modest,” but the significance is that September demand is strong, boding well for the fourth quarter, Jefferies analyst Sheila Kahyaoglu said in a note Wednesday.

United shares were among the airline stocks advancing the most in midday trading, up nearly 3%. Shares of American Airlines Group Inc. /zigman2/quotes/209207041/composite AAL -5.44% and Delta Air Lines Inc. /zigman2/quotes/200327741/composite DAL -4.40% were up 1.7% and 1.3% respectively, while the U.S. Global JETS ETF /zigman2/quotes/207744796/composite JETS -3.26% gained 1.5%.

United “is likely the best positioned airline to take advantage of the next stage of the revenue recovery, which will come from large corporates and international travel continuing to move closer to 100% recovered,” the Jefferies analyst said.

United enjoys “the most significant large corporate exposure” with its hubs in New York and San Francisco, and did not retire its widebody jets during the pandemic, which leaves the airline “poised to take advantage of international capacity that has come out of the market.”

United’s revenue from its international business was about 38% of its total $43.3 billion revenue in 2019.

Unlike single-aisle narrow-body aircraft, widebody jets allow airlines to offer tiered services and cash in on the pricier and rarely discounted first- and business-class tickets.

Stephen Trent at Citi said that United’s updated guidance was “positive,” with both the revenue growth expectations and EBIT margins for the quarter coming in ahead of Citi’s estimates.

“Interestingly enough, one of the areas where the carrier did better was on ex-fuel seat mile cost guide, with the jet fuel cost outlook virtually unchanged,” Trent said. Operational, or day-to-day, expenditures excluding jet fuel expenses “has been a key pandemic-era concern for investors,” the analyst said, reiterating his buy rating on United.

United shares are looking at a 6% gain for the week, with the JETS ETF up nearly 3% so far in the week.

United and other airlines also got a tailwind from news that for the first time since COVID brought air travel to a standstill in the spring of 2020 the number of people going through U.S. airport-security checkpoints over a holiday weekend exceeded pre-pandemic levels.

The summer travel season ended on a busy note as more than 8.7 million people passed through security in the last four days, topping the Labor Day weekend of 2019, the AP reported.

Online travel company Sabre Corp. /zigman2/quotes/200765742/composite SABR -1.52% said in a filing Wednesday that it was “encouraged” that both net air bookings and passengers boarded reached “their highest levels for us” in the last week of August since the beginning of the pandemic.

/zigman2/quotes/205037281/composite
US : U.S.: Nasdaq
$ 44.06
-1.86 -4.05%
Volume: 8.13M
Dec. 7, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$15.01 billion
Rev. per Employee
$484,507
loading...
/zigman2/quotes/209207041/composite
US : U.S.: Nasdaq
$ 13.55
-0.78 -5.44%
Volume: 28.16M
Dec. 7, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$9.31 billion
Rev. per Employee
$366,370
loading...
/zigman2/quotes/200327741/composite
US : U.S.: NYSE
$ 34.33
-1.58 -4.40%
Volume: 11.00M
Dec. 7, 2022 4:00p
P/E Ratio
299.30
Dividend Yield
0.00%
Market Cap
$23.03 billion
Rev. per Employee
$561,651
loading...
/zigman2/quotes/207744796/composite
US : U.S.: NYSE Arca
$ 18.09
-0.61 -3.26%
Volume: 3.48M
Dec. 7, 2022 4:00p
loading...
/zigman2/quotes/200765742/composite
US : U.S.: Nasdaq
$ 5.85
-0.09 -1.52%
Volume: 3.69M
Dec. 7, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$1.95 billion
Rev. per Employee
$317,351
loading...

This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.