Shares of U.S. airlines were moving higher in late morning trading after American Airlines (AAL), JetBlue (JBLU) and Southwest Airlines (LUV) beat Wall Street estimates.
AMERICAN: American Airlines this morning said its fourth quarter adjusted earnings per share came in at $1.04 on revenue of $10.94B, compared with analysts' estimates of $1.01 and $10.96B, respectively. The carrier forecast TRASM for Q1 to be flat to up approximately 2% year-over-year, with adjusted pre-tax margin of 2.5%-4.5%. It also forecast fiscal 2019 adjusted EPS of $5.50-$7.50, compared with analysts' estimates of $5.87. In a statement, CEO Doug Parker said the carrier is entering 2019 with "great momentum... We expect our total revenue per available seat mile to grow faster than our network competitors, and to deliver strong pre-tax earnings growth in 2019." He added that "At the midpoint of our guidance, 2019 diluted earnings per share excluding special items would increase approximately 40% versus 2018."
SOUTHWEST: Meanwhile, Southwest's Q4 EPS excluding items was $1.17, exceeding the Street's estimates of $1.07. Revenue for the quarter was $5.7B, compared with the $5.67B consensus. Southwest said it expects Q1 unit revenue to increase 4%-5%, but that assumes "no further significant impact on bookings from the ongoing government shutdown." So far this month, Southwest Airlines estimated the shutdown has cost it $10M-$15M in sales. The company will hold its earnings conference call on Thursday afternoon at 12:30pm ET.
JETBLUE: JetBlue said its adjusted EPS for Q4 was 50, above analysts' estimates of 43c, with revenue at $1.97B, versus the $1.96B consensus. JetBlue said it expects Q1 unit revenue to be down 2% to up 1%. It cited a "more active winter" and the timing of Easter and Passover. The carrier said it is executing on its plan to reach $2.50-$3.00 in EPS by 2020, but that it is "increasingly concerned" about the consequences of the U.S. government shutdown.
WHAT'S NOTABLE: The upbeat commentary and outlooks from American, Southwest and JetBlue come amid stifled expectations from investors, which have been concerned about earnings season since Delta (DAL) issued a downbeat revenue growth outlook earlier this month. On January 4, Delta said its December traffic increased 5.4%, with capacity also up 5.4%. The company said it now sees adjusted Q4 adjusted EPS of $1.25-$1.30, against analysts' estimates of $1.28 and its previous guidance of the "high end" of a previous $1.10-$1.30 range. Delta also said it expects revenue growth for Q4 to be up about 7% year-over-year, against the $10.85B consensus and below previously issued guidance of about 8%. However, Delta warned that it now sees Q4 unit revenues up about 3% y/y, down from a previous forecast of 3.5%. The carrier said that while close-in yield momentum continues, "the pace of improvement in late December was more modest than anticipated." Delta said that both leisure and business-travel demand was "healthy" in the quarter. Delta sees Q4 system capacity growth of 4% y/y, relatively in line with its prior outlook, CASM excluding fuel and profit sharing down about 0.5% y/y vs. its previous guidance of flat to down 1%, and an adjusted pre-tax margin of 10%-11% vs. its prior outlook of 9%-11%.
ANALYST COMMENTARY: In a research note to investors, JPMorgan analyst Jamie Baker said Southwest's RASM view "tops even the most bullish of expectations" and that it is expected to modestly boost the Q1 consensus. Meanwhile, he said JetBlue's RASM guide "appears to have hit the flattish buy-side bogey," and that American's guide "emerges similar to that of JetBlue."
PRICE ACTION: In late morning trading, shares of American Airlines are up nearly 5% to $33.15, JetBlue jumped 4.3% to $17.98 and Southwest gained 4% to $53.09. Others in the sector, including Delta and Alaska Air (ALK), which reports earnings this afternoon, are also higher.
Alaska Air
+2.07 (+3.25%)
United Airlines
+1.54 (+1.86%)
JetBlue
+0.83 (+4.82%)
Southwest
+2.115 (+4.15%)
American Airlines
+1.82 (+5.77%)
Delta Air Lines
+0.2 (+0.42%)