Airline Stock Roundup: AZUL posts Q1 loss, CPA, GOL, UAL and LUV at a glance

Last week, Latin American carriers Azul AZUL and Copa Holdings CPA has released its earnings results for the first quarter of 2022. The fact that a few Latin carriers were due to report their earnings figures in the last trading days, said in the report from the previous week. Improving demand for air travel in the region, thanks to widespread vaccination, helped the results of the two aforementioned carriers.

On the non-profit front, another Latin American carrier Gol Linhas The GOL released an impressive traffic report in April, reflecting the surge in demand for air travel in Brazil. Besides, United Airlines companies UAL has signed an agreement with Finnish renewable fuel supplier Neste to purchase Sustainable Aviation Fuel (SAF) over the next three years. This decision is in line with UAL’s green agenda. South West Airlines companies LUV has announced its intention to make air travel more comfortable for its passengers.

Summary of the latest Top Stories

1 Azul incurred a loss (excluding $4.89 of one-time items) of $1.14 per share in the first quarter of 2022, narrower than Zacks consensus estimate of a loss of $1.21. The amount of loss has also decreased year by year. Total revenue of $610.9 million fell short of Zacks’ consensus estimate of $638.5 million, but was up 82.9% year-over-year as the demand for air travel was improving, thanks to widespread vaccination programs in Brazil.

Azul, currently wearing a Zacks rank #4 (sale), waits its ability to grow by around 10% in 2022 compared to its published figure in 2019. Revenue per available seat mile is expected to increase by more than 20% in 2022 compared to the figure published in 2019. (excluding non-recurring items) is expected to be approximately $4 billion, 2023 EBITDA (excluding non-recurring items) is expected to be $5.5 billion.

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2. Copa Holdings reported first-quarter 2022 earnings (excluding 23 cents from one-time items) of 70 cents per share, which beat Zacks’ consensus estimate of 36 cents. In the prior year quarter, CPA suffered a loss of $2.23 per share. Quarterly revenue of $571.6 million beat Zacks’ consensus estimate of $566.1 million and was up significantly year-over-year, driven by improved travel demand by plane.

Copa Holdings expects second-quarter 2022 operating margin to be just 3-5%. CPA forecasts capacity of 5.9 billion, or 96% of the level of the second quarter of 2019. The load factor (percentage of seats occupied by passengers) is estimated at around 86% in the second quarter. The price of fuel is estimated at $4 per gallon. For the full year, CPA expects capacity to be around 98% of 2019 levels.

3. Under the agreement with Neste, UAL can buy up to 52.5 million gallons of SAF for its flights at Amsterdam Schiphol Airport and potentially at other airports as well. The agreement advances UAL’s goal of reducing greenhouse gas emissions by 100% by 2050. In the first year, Neste will supply United Airlines with 2.5 million gallons of SAF to Amsterdam. The offer will gradually increase. In the second year, UAL can purchase up to 20 million gallons of SAF, while in the third year, it can take delivery of up to 30 million gallons of SAF.

4. To attract more traffic, Southwest Airlines aims to spend more than $2 billion to improve the flight experience of its passengers. By making this huge investment, LUV intends to introduce larger overhead bins for luggage, faster internet connection on board and sockets in every seat, in addition to improving the cocktail menu. Among other benefits, LUV aims to introduce a fare category called Wanna Get Away Plus later this month.

5. In April, consolidated Gol Linhas traffic jumped 209.5% year-over-year. To cope with the increase in demand, GOL is expanding its capacity. During the same month, capacity increased by 227.8% year over year. As traffic growth lagged capacity expansion, load factor fell 4.4 percentage points (pp) to 78.2% last month.

Sustained traffic in its home markets leads to the pink scenario on a consolidated basis. In April, domestic traffic and capacity improved by 192.4% and 211.6%, respectively. On the home front, 187.9% more passengers boarded GOL flights in April 2022 compared to a year ago.


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 13.4% to $63.67. Over the past six months, the NYSE ARCA Airline Index has fallen 30.7%

What’s next in airspace?

With the first quarter 2022 earnings season almost over for airlines, stay tuned for the usual updates in the space.

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United Airlines Holdings Inc (UAL): Free Stock Analysis Report

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Gol Linhas Aereas Inteligentes SA (GOL): Free Stock Analysis Report

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

AZUL (AZUL): Free Stock Analysis Report

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