The aviation sector has faced numerous operational challenges since the pandemic, with air travel coming to a screeching halt and plummeting to levels not seen before. Although a recovering economy helped the U.S airlines to witness a surge in bookings in the past months, another hiccup of increased flight cancellations and delays came.
According to FlightAware.com, airlines have canceled more than 50,000 flights, while more than half a million flights have been delayed since Memorial Day weekend. Additionally, labor shortages and a lack of skilled personnel have made it difficult for airlines to return to their pre-pandemic levels.
Given the weak backdrop, we think investors should steer clear of airline stocks JetBlue Airways Corporation (JBLU), Spirit Airlines, Inc. (SAVE), and Hawaiian Holdings, Inc. (HA).
JetBlue Airways Corporation (JBLU)
JBLU is a travel company that provides air transportation services through its segments, including Domestic, Caribbean, & Latin America.
For the fiscal second quarter ended June 30, 2022, JBLU’s operating expenses increased 89.2% year-over-year to $2.56 billion. Net loss for the period increased 393.8% from the prior-year quarter to $188 million, while its loss per share came in at $0.58, up 390% year-over-year.
The company’s EPS is expected to come in at a negative of $0.87 for the fiscal year ending December 2022.
The stock has declined 48.5% over the past year and 49% over the past six months to close the last trading session at $7.70.
JBLU’s POWR Ratings reflect this bleak outlook. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
JBLU has a Sentiment and Stability grade of D. Within the 31-stock, D-rated Airlines industry, JBLU is ranked #23.
Click here to see the additional POWR Ratings for JBLU (Growth, Value, Momentum, and Quality).
Spirit Airlines, Inc. (SAVE)
SAVE provides airline services. It serves 85 destinations in 16 countries in the United States, Latin America, and the Caribbean.
On July 27, SAVE terminated its merger agreement with Frontier Group Holdings, Inc. (ULCC), the parent company of Frontier Airlines, Inc.
“While we are disappointed that we had to terminate our proposed merger with Frontier, we are proud of the dedicated work of our team members on the transaction over the past many months,” said Ted Christie, President, and CEO of SAVE.
SAVE’s operating income decreased 148.6% year-over-year to a negative $45.33 million in the fiscal second quarter ended June 30, 2022, while its operating expenses increased 84.3% from the prior-year quarter to $1.41 billion. In the same period, the company’s net loss and net loss per share came in at $52.41 million and negative $0.48, respectively.
Street EPS estimate stood at a negative $0.07 for the fiscal quarter ending September 2022. Also, for the ongoing fiscal year, the consensus EPS estimate came in at a negative $2.
The stock has slumped 9.6% over the past six months to close the last trading session at $22.31.
It’s no surprise that SAVE has an overall D rating, which translates to Sell in our POWR Ratings system. It also has a D grade for Growth, Stability, and Sentiment. It is ranked #28 in the same industry.
To see the additional POWR Ratings for Quality, Momentum, and Value for SAVE, click here.
Hawaiian Holdings, Inc. (HA)
HA, through its subsidiary, Hawaiian Airlines, Inc., engages in the scheduled air transportation of passengers and cargo.
For the fiscal quarter ended June 30, 2022, HA’s operating expenses increased 83% year-over-year to $717.95 million. Operating income reduced 241.2% year-over-year to $26.09 million. Net loss and net loss per share stood at $36.77 million and $0.72, up 495.3% and 500%, respectively, from the same period the prior year.
Analysts expect HA’s EPS to stand at negative $0.19 in the fiscal quarter ending September 2022 and at negative $4.23 in the ongoing fiscal year.
The stock has declined 25.9% over the past year and 21.9% over the past six months to close the last trading session at $14.88.
HA's overall D rating translates to Sell in our POWR Ratings system. It also has a D grade for Stability and Sentiment. In the Airlines industry, it is ranked #24.
In addition to the POWR Rating grades we’ve stated above, one can see HA ratings for Growth, Value, Momentum, and Quality here.
JBLU shares were trading at $7.67 per share on Friday afternoon, down $0.03 (-0.39%). Year-to-date, JBLU has declined -46.14%, versus a -15.71% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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