Airline Stock Roundup: CPA’s May Traffic, RYAAY’s Airfare Update, AAL at a Glance

As US airlines grapple with a shortage of pilots, American airlines AAL received encouraging news on the labor front last week. Two regional carriers, Piedmont Airlines and Envoy Air, owned by AAL, will increase the salaries of their pilots by 50% until the end of August. Latin American carrier Copa Holdings CPA reported a drop in traffic in May compared to the level of the comparable period in 2019.

As airfares move north as airlines try to cover rising fuel expenses, the European carrier Ryanair HoldingsRYAAY’s CEO expects ticket prices this summer to rise 7-9% from pre-pandemic levels. An expansion update was also available on JetBlue Airlines companies JBLU last week.

Read the latest airline roundup here.

Summary of the latest Top Stories

1. As a result of the wage hike, the hourly wage at Piedmont Airlines for co-pilots in their first year will increase from $51 to $90 per hour. For first-year captains, the salary will increase from $78 to $146 per hour. The Piedmont CEO said the airline could even extend the temporary hikes if needed. Piedmont pilots are moving to American Airlines’ mainline operations, leaving the carrier with a shortage of 25 pilots each month. Envoy Air has reached a similar agreement with its pilots’ union to offer a 50% bonus to pilots’ hourly rates until the end of August 2024. Envoy continues to see around 80 of its pilots resign each year to work in other Airlines companies. The regional carrier has been hiring about 60 pilots a year for some time. When it materializes, the pay increase will make the pilots of these two airlines the highest paid staff among US regional airlines.

2. Copa Holdings’ traffic, measured in revenue passenger miles (RPM), decreased 4.2% to 1.72 billion in May 2022 from the same period level in 2019. The decline was mainly due to the decline in demand for air travel induced by the coronavirus compared to pre-pandemic levels (2019). Due to tepid demand, capacity – measured in available seat miles (ASM) – fell 3.7% from the 2019 level of 2 billion. With the decline in traffic greater than the contraction in capacity, the load factor (percentage of seats occupied by passengers) deteriorated by 40 basis points (bps) to 85.7% in May.

3. To meet growing demand for air travel, JetBlue has launched operations in Canada with daily nonstop flights from New York’s John F. Kennedy International Airport (JFK) to Vancouver International Airport. With international travel demand picking up, the service is expected to attract significant traffic this summer. This expansion is part of JetBlue’s Northeast alliance with American Airlines. JBLU is also expected to launch service to Vancouver from Boston, MA as part of this partnership. JBLU, which currently carries a Zacks Rank #3 (Hold), operates this new service from Vancouver on an Airbus A320 aircraft offering more legroom on the coach, free high-speed internet, plus snacks and beverages free non-alcoholic drinks.

You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

4. According to a Reuters report, Ryanair CEO Michael O’Leary said that with bookings strengthening, management expects summer fares to rise 7-9% from previous pre-pandemic levels. O’Leary said he expects the load factor (percentage of seats occupied by passengers) to almost reach pre-pandemic levels of around 94% in June. “And July, August and September are looking very strong with higher load factors and higher rates,” he added. Ryanair expects airport management groups to ‘solve’ the staffing crisis through recruitment to improve the traveler experience over the summer.

Performance

The following table shows the price development of the major airline players over the past week and over the past six months.

Image source: Zacks Investment Research

The chart above shows that all airline stocks have traded in the red over the past week. The NYSE ARCA Airline Index fell 13.6% to $57.01. Over the past six months, the NYSE ARCA Airline Index has fallen 26%.

What’s next in airspace?

With the increase in demand for air travel, more updates related to carrier expansion may be available in the coming days.

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Ryanair Holdings PLC (RYAAY): Free Stock Analysis Report

JetBlue Airways Corporation (JBLU): Free Inventory Analysis Report

Copa Holdings, SA (CPA): Free Stock Analysis Report

American Airlines Group Inc. (AAL): Free Inventory Analysis Report

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