Background
Year-to-date gains by Delta Air Lines Inc., United Airlines Holdings Inc. and American Airlines Group Inc. are more than triple the S&P 500’s gains, as major U.S. airlines deliver strong performance despite ongoing headwinds. Delta continued the trend July 13 by announcing second-quarter earnings per share that exceeded analysts’ estimates.
United and American could also post their best quarterly EPS since 2019, while the leading 11 U.S. carriers collectively are projected to post record second-quarter revenue.
The issue
Delta reported adjusted profit of $2.68 a share, compared with the $2.41 expected by analysts and the $1.44 per share it reported a year ago. Meanwhile, United’s adjusted EPS is projected to increase 179% from a year ago, and the $1.53-per-share consensus estimate for American is the highest since mid-2019.
United’s stock is up 49% year to date, with American and Delta also seeing much bigger gains than the S&P 500.
Airlines are still experiencing challenges, including Canadian wildfires and labor shortages. But falling fuel prices have helped U.S. carriers reduce prices three months running. If travel demand wanes later in the year, that could dent travel stocks, including airlines.
“The big question remains — is the consumer ready to spend more and consume the same or more? Or is this a bounce-back that will fade?” said Bloomberg Intelligence Senior Analyst George Ferguson in mid-June.
Tracking
Use Bloomberg’s COMP function to compare airline returns to the U.S. stock benchmark, MODL to analyze line-item estimates, and KPIC to compare key performance metrics across industry peers. Track airline schedules with DSET FLY <GO>. Run NSUB FFMSTORY to subscribe to functions-based stories.
For more information on this or other functionality on the Bloomberg Professional Service, click here to request a demo with a Bloomberg sales representative. Existing clients can press <HELP HELP> on their Bloomberg keyboard.
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