Share price movement in October

Stock prices of major US airlines increased at an average rate of ~15% during October. The rate of increase in the NYSE ARCA Airline Index (15%) was more than three times that of the S&P 500 Index (4%). Share prices had declined in early October and in September, but they accelerated after the release of positive earnings from all major US airlines. The airline index increased by ~25% on a year-to-date basis from 69.45 in the beginning of the year to 89.95 at the end of October.

Rising demand, falling crude prices drive October airline growth

Share price growth

During the month, the highest share price growth of 24.5% was recorded by Alaska (ALK), followed by United’s (UAL) 16.1%, Delta’s (DAL) 15.3%, American’s (AAL) 13.6%, JetBlue’s (JBLU) 12.6%, and Southwest’s 5.9%. ETFs such as the SPDR S&P Transportation Index (XTN) and the iShares Transportation Average ETF (IYT) that have major holdings in airline stocks have benefited from rising stock prices.

All major US airlines reported a positive growth in traffic and revenue. With the exception of Delta, all other airlines reported higher net margins during the third quarter compared to the previous year. 

Key performance indicators

The highlights of the key performance indicators of US airlines include:

  • Economic growth in the US continues to improve, due to increased real disposable income and consumer spending. These are main drivers of leisure travel.
  • Business travel is more dependent on corporate profits, which also increased, leading to improved employment activity and lower unemployment rates.
  • The rate of growth in passenger traffic in October was higher than in August and September.
  • Passenger capacity growth remained the same as in September, while load factor improved in October.
  • Passenger yield rose in the domestic and international market as air fares picked up in October.
  • Crude oil fell below $90 per barrel due to continued supply growth, which led to lower fuel costs for airlines.
  • Employment in the airline industry increased continuously for ten consecutive months in September.
  • Improving earnings and profitability enabled companies to increase investment and reduce debt, as well as provide good returns to shareholders.

The discussion of important indicators of airline performance covered in this series will provide investors with a consolidated overview of trends in the airline industry.

Latest articles

Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.

The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.

Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.

Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.

14 Jun

IEA Again Slashes Its Oil Demand Growth Estimate

WRITTEN BY Rabindra Samanta

As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.

Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.