Year-to-date price performance
This year so far, airline stocks have been battered on concerns of rising fuel prices and overcapacity—with the exception of United Continental (UAL) and Spirit Airlines (SAVE). The two stocks have generated massive returns of 37.8% and 13.4%, respectively, year-to-date (or YTD), significantly outperforming the returns of the SPDR S&P 500 ETF (SPY). The ETF has lost 0.7% of its value.
Stocks rebounding after Q3 results
Airline stocks have suddenly been gaining solid momentum since late October. This turnaround could be due to most airline companies’ reporting impressive third-quarter results. The majority of air carriers have seen improved key metrics and provided optimistic outlooks, which built up investors’ confidence in the stocks. Plus, cooling oil prices point to enhanced profitability in the coming quarters—which has caused a surge in airline stocks (IYT) over the past few weeks.
Shares of Delta Airlines have surged 12.6% since the company reported its third-quarter results on October 11. The company’s top- and bottom-line results came in ahead of Wall Street analysts’ estimates and reflected significant year-over-year improvement.
Alaska Airlines’ stock price has risen 12.1% since its third-quarter results on October 25. The company’s revenues and profits both beat analysts’ expectations.
Shares of United Continental, which were already outperforming the broader market, got a further boost from the company’s overwhelming third-quarter results reported on October 16. The stock has gained 14.2% since then.