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Airline Stocks Beat Expectations in Q1

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Airlines beat earnings estimates

Most of the first-quarter reporting cycle is now behind us, as over 75% of S&P 500 members have reported their results. The airline industry had a decent quarter, with many companies beating earnings estimates. Nonetheless, their growth has slowed drastically YoY (year-over-year). Airlines’ better-than-expected bottom lines boosted the iShares Transportation Average ETF (IYT) by 4.1% in April. The ETF tracks Dow Jones Industrial Average transportation stocks.

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Major airlines’ Q1 performance

The largest US air carrier, Delta Air Lines (DAL), beat analysts’ estimate of $0.90 with adjusted EPS of $0.96, marking a ~28% YoY improvement. Its bottom-line growth was driven by increased revenue, cost management, and the renewal of its credit card agreement with American Express (AXP).

The second-largest air carrier, Southwest Airlines (LUV), beat analysts’ estimate of $0.61 with adjusted EPS of $0.70 in the first quarter. However, its earnings fell 6.7% YoY due to sluggish revenue growth and higher operating expenses.

For United Airlines (UAL), the third-largest US air carrier, adjusted EPS more than doubled YoY to $1.15 from $0.50 and beat analysts’ estimate of $0.95. Its earnings were boosted by higher revenue, cost management, and lower fuel costs.

The fourth-largest air carrier, American Airlines (AAL), came a penny ahead of the Wall Street estimate with first-quarter adjusted EPS of $0.52. However, its earnings fell 30.7% YoY due to sluggish revenue growth and increased operating expenses.

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