Airlines Week In Review: American, United, Southwest & JetBlue
In the past week, American (NASDAQ:AAL), United (NYSE:UAL), Southwest (NYSE:LUV) and JetBlue (NASDAQ:JBLU) released their passenger traffic reports for the month of August. While network carriers – American and United – reported relatively flat passenger traffic in August on a year-over-year basis, low-cost carriers – Southwest and JetBlue – reported significant growth in their passenger traffic. Southwest’s passenger traffic rose by nearly 5% annually and JetBlue’s passenger traffic rose by nearly 7% annually, in August. [1] [2] This confirms that low-cost carriers are continuing to attract more passengers with their lower fares and are likely eating into the market shares of network carriers. Having said this, network carriers have also grown their passenger traffic in the year-to-date period benefiting from the overall solid growth in demand for air travel. All in all, based on passenger traffic reports for the months of July and August, major U.S. airlines including American, United, Delta, Southwest, JetBlue and Alaska look set to post healthy growth in the September quarter.
American Airlines Group
Separately, Wednesday, September 10, American became the first mainline airline to obtain Federal Aviation Administration (FAA) approval for using electronic attendant manuals on-board. These e-manuals accessed through 5.3 inch Samsung tablets have replaced 5-pound paper manuals used until now by American’s flight attendants. The carrier use to spend approximately $300,000 annually on printing and shipping updates for flight attendant’s paper manuals. [3] But now with these new e-manuals, the carrier will save this money, as flight attendants will be able to update their manuals electronically in minutes. In addition, American estimates that the switch from 5-pound paper manuals to light-weight tablets will save roughly $650,000 annually in fuel costs as a result of weight savings. Prior to this upgrade, American was also the first carrier to provide its pilots with iPads in place of 35-pound pilot flight kits. This upgrade has saved roughly $1.2 million in fuel costs annually for American. [3]
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– We currently have a stock price estimate of $39.25 for American, around 3% ahead of its current market price.
– American’s stock price has risen by over 6% over the past week.
– We currently estimate American to post revenue of $43.2 billion in 2014, compared with its consensus revenue of $43 billion.
See our complete analysis of American Airlines Group here
Southwest Airlines
Earlier in the week, Monday, September 8, Southwest unveiled its new look, launching a new logo, new aircraft livery and a fresh airport experience. [4] The new logo of the carrier has retained its iconic heart shape, but now sports three stripes in colors: orange, red and blue. The carrier has also come up with a new aircraft paint job, retaining the striped tail on its aircraft but adding the name ‘Southwest’ on the sides of its aircraft fuselage and displaying the new logo on the aircraft belly. This is the first paint job that Southwest has implemented on its aircraft since 2001, and we figure this new look is well timed as the carrier is nearly through with integrating AirTran. Additionally, Southwest recently started international flights, taking over AirTran’s operations, and will be free from flight restrictions at Dallas Love Field Airport next month. These milestones also make this a good time to launch a new look.
– We currently have a stock price estimate of $29.35 for Southwest, around 10% below its current market price.
– Southwest’s stock price has risen by about 5% over the past week.
– We currently estimate Southwest to post earnings of $1.72 per share in 2014, compared with its consensus earnings of $1.79 per share.
See our complete analysis of Southwest Airlines here
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- Southwest’s August traffic report, September 9 2014, www.swamedia.com [↩]
- JetBlue’s August traffic report, September 11 2014, www.jetblue.com [↩]
- American Airlines To Use Electronic Flight Attendant Manuals, September 10 2014, www.aa.com [↩] [↩]
- Southwest unveils its new look, same heart, September 8 2014, www.swamedia.com [↩]