Aviation Industry Updates: August 1, 2023

American Raises 2023 Profit Forecast After Strong Second Quarter

KEY POINTS:

• American Airlines on Thursday raised its earnings outlook for 2023 after a strong start to the peak travel season, the latest airline to reap the rewards from the continued boom in demand.
• Still, American said Thursday that it expects unit revenues to drop as much as 6.5% in the third quarter from a year earlier with capacity growth of up to 7% from the same period of 2022. For the third quarter, American expects to earn an adjusted 85 cents to 95 cents per share, in line with estimates.
• The Fort Worth, Texas-based carrier expects to earn between $3 and $3.75 a share for the full year, adjusting for one-time items, up from a forecast in May to earn about $2.50 to $3.50. That updated 2023 profit guidance falls in line with Wall Street expectations of $3.10, according to Refinitiv consensus estimates.
• American shares dropped more than 6% on Thursday to $17.44, a larger drop than its peers.
• Airline executives have been upbeat about travel demand, particularly for international trips. Some airfares have declined compared with last year, when airlines struggled to rebuild their schedules after the worst of the Covid pandemic, leaving travelers with fewer flights and seats to choose from.
• The company’s forecasts include costs from labor deals, like a tentative agreement with its pilots. However, American’s pilots union are seeking improvements to its tentative contract following a deal struck but rival United and its pilots’ union last week.

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Southwest Shares Tumble 9% As Costs Rise, Unit Revenue Slips

KEY POINTS:

• Shares tumbled nearly 9% Thursday after the airline reported lower unit revenue and higher costs for the second quarter — and said the trends are likely to continue this quarter.
• The Dallas-based airline’s second-quarter unit revenue dropped 8.3% from a year earlier, Southwest said, citing a policy change last summer that removed expiration dates from Covid pandemic travel credits.
• The carrier said it expects unit revenue to fall as much as 7% during the third quarter on capacity up 12% from a year earlier. It blamed “challenging comparisons from the pent-up travel demand surge in 2022, and higher than seasonally-normal growth.”
• Airlines have enjoyed record revenue in recent months, but airfare in the U.S. has dropped from 2022, according to the latest inflation read.
• Southwest said it is “revamping” 2024 schedules to reflect changing customer demand as business travel revenue recovers but lags pre-pandemic levels.
• “We are working to align our network, fleet plans, and staffing to better reflect the current business environment,” CEO Bob Jordan said in an earnings release.

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Spirit Exceeds Earnings Expectations But Faces Profitability Challenges

KEY POINTS:

• In the vast and ever-evolving world of finance, where numbers mesmerize even the most seasoned analysts and investors, one company has been making waves. Spirit Airlines, listed on the New York Stock Exchange as SAVE, is scheduled to reveal its eagerly-awaited earnings results after the market closes on Wednesday, August 2nd. The tension is palpable as industry experts and intrigued shareholders eagerly anticipate the outcome.
• Anticipation surrounding this announcement stems from the expectations set by analysts who project that Spirit Airlines will reveal earnings of $0.38 per share for the quarter. This prediction serves as a benchmark against which the company’s performance will be measured – a high-stakes game of financial analysis that keeps investors on their toes.
• But what do these numbers truly signify? They embody so much more than mere figures; they entangle themselves in a narrative of growth and success or perhaps hint at challenges yet to be overcome. Thus, it is no surprise that countless individuals seek to participate in the company’s earnings conference call, attempting to glean insight into Spirit Airlines’ future trajectory.
• The buzz surrounding Spirit Airlines does not stop there. Industry authorities have recently issued reports offering their own perspectives on the company’s prospects. Notably, StockNews.com upgraded Spirit Airlines from a “sell” rating to a “hold” rating on Thursday, July 6th – a nod toward their improved assessment of its potential. Contrastingly, JPMorgan Chase & Co., another influential player in the financial sphere, lowered their target price for Spirit Airlines from $28.00 to $10.00 in a research note published on Monday, May 8th.

Best Stocks

Alaska Cuts More Than 3,000 Flights From January 2024 Schedule

KEY POINTS:

• North Americans will have close to 500,000 fewer seats with Alaska Airlines this coming winter as the Seattle-based airline looks to shave more than 3,000 flights from its January network. The data retrieved from Cirium looks scarce, as the carrier will reduce multiple services to airports across the continent.
• While the most significant loss of services will be seen between Paine Field (PAE) and San Francisco (SFO), reducing 72 weekly services will axe over 5,400 seats from the airline's network. In comparison, the most significant gap in seat numbers will be left between Seattle Tacoma (SEA) and Sacramento Airport (SMF), where a reduction of 48 weekly services represents over 12,700 seats removed from Alaska's books.
• Deciphering the Cirium data, it is clear that the airline looks to shave up to 6-7 flights a day between underperforming centers. Between multiple centers, Alaska Airlines will reduce up to 48 weekly services.

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2023 HIRING EVENTS

OBAP | AUG 9-11 | MSY *onsite interviews & CJOs*

LPA | SEP 14-16 | ISM

RTAG | OCT 7-8 | FTW