Company / Analytics

Analytics, 07 December 2022

Airline Stocks To Consider For Your Portfolio

With the covid-19 pandemic, airline revenue and prices took a nose dive and new variants struck them while they were already down. The slow return to normalcy has brought on congestion in airports and fully booked flights as travel demand has skyrocketed, this has also had a positive impact on the industry’s revenues.

The Ukraine-Russia conflict and the rise in oil prices have become a stumbling block against the ongoing recovery, more so given that 30% of airline expenditure goes to fuel. Though it may take a lot of time for things to go back to normal, some experts say 2023 may be the time.

2020 and 2021 were the years when, right after the pandemic, the industry’s revenue took a nose dive while 2022 saw the industry take on suppressed demand and inflation. 2023 may be the year when conditions are just right for these stocks according to these experts.

Below are a few airline companies to consider for your portfolio

United Airlines

The Chicago-based United Airlines has been named second on the IBD’s top growth stocks, coming in only behind Copa Holdings. The stocks went a bit beyond the 45.67 dollar buy point during its six months cup-with-handle base but took a step back stopping right below the entry.

Thanks to the spike in travel demand, coming after the pandemic caused a slow business pace, United Airlines’ stock earnings returned to profits this year, in its second quarter at 1.43 dollars per share and again in its third quarter at 2.81 dollars per share. The losses in the same period last year stood at 3.91 dollars per share and 1.02 dollars per share respectively. With last year’s quarter four losses at 1.60 dollars per share, this year’s quarter four is expected to range between 2-2.25 dollars per share according to the company and 2.07 dollars per share according to Fast Set Analysts.

Bluejet airways

Bluejet airways stocks are ready to take to the skies after the long tumble caused by the pandemic. At the company’s third-quarter earnings call CEO Robin Hayes said they have been experiencing a healthy revenue environment with no sign of slowing down in air travel demand. The company is however trading at less than half of sales (0.30-times) and less than book value (0.74-times).

Back in August this year, bluejet bought spirit airlines for a 3.8 billion dollar all-cash offer. This came after half a year’s worth of bidding war against the frontier group holdings with its cash and stock merger offer for spirit airlines. The deal was said to be closed before April 2024 but problems with federal regulations seem to take center stage on what is left for the deal to be completed. Given that the justice department already has an ongoing fight against bluejets’ partnership with American airways, the federal regulations must be followed to avoid further complications. The regulations state the move should not harm competition or cause a rise in travel prices.

Southwest Airlines

Southwest Airlines stocks, after they bottomed out at 31 dollars have spiked to 37.70 dollars as of the writing of this stock. The tolerable, company earnings have exceeded the 0.42 dollars per share expectation to stand at 0.50 dollars per share. These stocks have made it to CFRA’s and Morgan Stanley’s top pick for airline stocks after surpassing the 6.21 billion dollars expectation in revenue. Its revenue now stands at 6.22 billion dollars.

Southwest airlines intend to hold a key investor day on the seventh of December. During a similar event last year the airline introduced its capacity growth forecast as well as for higher cost outlook. This consequently led to numerous downgrades. The Bank of America says it expects to hear about a plan to increase earnings, improve margins and grow shareholders’ returns on capital.

Southwest Airlines has outshone most competitors in its industry on the metric of cash per plane and works with low operation costs. It has been said to be looking ready for expansion given its staff and compound layout and even more so with the Boeing 737s being delivered soon.

Delta airlines

According to the company’s latest report, Delta Airlines stocks have a rising relative price strength, and its earnings growth numbers shot up from zero to more than 400%. The company is ranked number four among its competitors in the transportation- airline industry group alongside frontier group holdings and united airlines.

Though it is down -4.39%, after the company recently closed at 34.61 dollars, delta airlines still perform better than more than half of the air travel industry. Delta airlines stocks have also been known to always hit higher than 50% of the stock market.

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