Ally Schmidt

American Airlines (AAL) reported its third-quarter earnings results before the market opened on October 25.

Southwest Airlines (LUV) reported its Q3 2018 results before the markets opened on October 25. Its revenues rose 5.1% YoY to $5.6 billion.

September is turning out to be a good month for JetBlue Airways’ (JBLU) investors.

On August 27, JetBlue Airways (JBLU) led the price change in checked baggage fees. It raised the price for the first checked bag from $25 to $30 and the second checked bag from $35 to $40.

Crude oil prices have been rising throughout 2018 due to supply concerns.

Since JBLU’s traffic growth has outpaced its capacity growth, utilization has improved for the seventh straight month.

In August 2018, JetBlue Airways’ (JBLU) traffic has grown by 6.7% year-over-year, 1.9% higher than its capacity growth of 4.8% YoY.

JetBlue Airways’ capacity growth has slowed down in the past few months.

American Airlines (AAL) was the last of the three legacy carriers to announce an increase in checked baggage fees on Friday.

Boeing’s consensus-12-month target price is $412.6, which indicates a 15.9% return potential as of the September 17 closing of $356.

So far in September, Boeing has managed to increase investor wealth by 4.2%.

For the past few years, Boeing (BA) has been behind Airbus in the order booking race.

Airbus left no stone unturned to win the 2017 order race against Boeing.

Currently, 33.3% (or six) of the analysts tracking Southwest Airlines (LUV) stock have given it a “strong buy” rating.

Southwest Airlines (LUV) stock has declined 0.5% since its traffic update on September 12.

Due to increasing crude oil prices, Southwest Airlines (LUV) expects fuel costs to rise more in the third quarter.

In August, Southwest Airlines’ (LUV) utilization declined 0.6% YoY (year-over-year) to 84.3% as traffic growth lagged capacity growth.

In August, Southwest Airlines’ (LUV) traffic grew 1.3% YoY, which was much lower than its capacity growth of 2% YoY for the month.

In August, Southwest Airlines’ (LUV) capacity increased 2% YoY (year-over-year) after recording growth of 3.2% in July.

Of the 26 analysts tracking Boeing (BA) stock, eight analysts gave “strong buy” recommendations. Another 11 analysts gave “buy” recommendations.

According to Boeing’s latest guidance, it expects to deliver 810–815 commercial aircraft in 2018.

Delta Air Lines (DAL) just reported that it flew 18.3 million passengers last month—the most ever for the month of August and 4% higher than last August.

As of December 22, 2017, five of the 15 analysts (or 33.3%) tracking Spirit Airlines (SAVE) stock have “strong buy” recommendations.

For October, SAVE was ranked third on the metric according to the Department of Transportation. That’s a huge improvement since Spirit has historically been last.

Spirit Airlines has announced that Ted Christie, its current CFO (chief financial officer), will take over as CEO at the beginning of 2019.

Spirit Airlines’ (SAVE) capacity is expected to increase 17.5% YoY in the fourth quarter of 2017, leading to a 2017 capacity growth of about 16.5%.

Right now, 36.8% of the analysts tracking Southwest Airlines (LUV) stock have given it “strong buy” ratings. Another 52.6% of analysts have “buy” ratings on the stock.

Southwest Airlines (LUV) stock has risen 7.5% since its traffic update on December 7, 2017. Its regional peer JetBlue Airways (JBLU) has also risen 0.93%.

In November 2017, Southwest Airlines’ (LUV) utilization improved 0.7% year-over-year (or YoY) to 85.8% as its traffic growth exceeded its capacity growth.

In November 2017, Southwest Airlines’ (LUV) traffic grew 3.4% year-over-year (or YoY). This growth was higher than its capacity growth of 2.5% YoY in the same month.

In November 2017, Southwest Airlines’ capacity increased 2.5% year-over-year (or YoY) after recording growth of 1.7% in October.

United Continental’s board has approved a new share buyback program worth $3 billion—approximately 17% of the company’s market cap of $18 billion at the time of the announcement.

For the fourth quarter of 2017, analysts are expecting United Continental’s (UAL) revenue to rise 1.9% YoY (year-over-year) to $9.2 billion.

In November 2017, United Continental’s (UAL) capacity rose 5.1% YoY (year-over-year). The average growth for the quarter is close to 4.2% YoY.

Delta Air Lines (DAL) stock rose 1.6% on the day of its November traffic release on December 4, 2017, and its peers also saw rises.

In November 2017, Delta’s (DAL) capacity grew 2.9% YoY (year-over-year) to ~18.9 billion miles. YTD (year-to-date), the carrier’s capacity has risen 1.0%.

Analysts’ views According to Reuters, of the 26 analysts tracking Boeing (BA) stock, seven (26.9%) have recommended “strong buy,” seven (26.9%) have recommended “buy,” and 12 (46.2%) have recommended “hold.” There were no “sell” or “strong sell” recommendations. Analysts’ upgrades Following Boeing’s 3Q17 earnings announcement, two analysts initiated coverage on the stock, while some raised their target prices. Jefferies […]

Dividends Boeing (BA) has been paying dividends consistently for the past 20 years. In 3Q17, the company paid a total of $900 million in dividends, which was ~30% of its free cash flow generated in the quarter. Falling yield At its current market price of $268, Boeing has an indicated dividend yield of 2.1%. The yield has been […]

Underfunded status At the end of 2016, Boeing’s (BA) pension plan was underfunded by $20 billion. General Electric (GE), with a plan underfunded by $31.1 billion, is the only company worse off than Boeing. This status is a drastic turn of events—Boeing’s pension plan was overfunded by $4.7 billion until 2008. Two things played a key role in this […]

Revenue In fiscal 2017, Boeing (BA) continues to expect revenue of $90.5 billion–$92.5 billion, which is 3.4% lower than its 2016 revenue of $94.6 billion. Of this revenue, $55.5 billion–$56.5 billion will be contributed by the Commercial Airplanes segment, $20.5 billion–$21.5 billion will be contributed by Defense, Space & Security, and $14.0 billion–$14.5 billion by […]

Performance in 3Q17 In 3Q17, Boeing (BA) saw revenue of $24.3 billion, 2% growth from the $23.9 billion it reported in 3Q16. Its operating margin expanded from 9.5% in 3Q16 to 11.1% in 3Q17. The Commercial Airplanes segment recorded a 1% YoY fall in revenue to $15.0 billion. The segment’s operating margin expanded from 8.5% in 3Q16 to […]

Last week, Boeing (BA) overtook General Electric (GE) as the most valued company by market capitalization, breaking GE’s 27-year record.

Southwest Airlines (LUV) currently has the highest forward EV-to-EBITDA multiple of 6.9x among its peers.

For 3Q17, JetBlue Airways’ (JBLU) revenues grew 4.6% year-over-year to $1.8 billion, in line with analyst estimates for the quarter.

Southwest Airlines’ (LUV) 3Q17 revenues grew 2.5% year-over-year to $5.3 billion, missing analyst estimates of $5.7 billion in revenues.

ALK’s 3Q17 net income fell 3.9% YoY to $266.0 million, leading to earnings per share (or EPS) of $2.24 and missing analysts’ estimates of $2.26 per share.

Year-to-date through November 10, 2017, TripAdvisor stock has fallen 31.9%.

Currently, TripAdvisor’s (TRIP) forward price-to-earnings ratio stands at 28.0x, which is lower than the 35.6x average valuation seen since its initial stock listing in 2011.

At the end of 3Q17, TripAdvisor had $763.0 million in cash and short-term investments on its balance sheet—lower than the ~$904.0 million it had at the end of 2016.

TripAdvisor’s (TRIP) 3Q17 adjusted EBITDA declined 17.0% YoY to $95.0 million.

In 3Q17, TripAdvisor’s revenues grew 4.3% year-over-year to $439.0 million.

Of the 31 analysts rating Priceline’s stock after the company’s 3Q17 earnings report, 19.4% (six analysts) have issued a “strong buy” rating and 58.1% (18 analysts) have issued a “buy” rating.

After Priceline (PCLN) released its 3Q17 results, analysts’ estimates for 2017 and 2018 were revised downwards. For the fourth quarter of 2017, sales are expected to grow 14.8% year-over-year or YoY to $2.7 billion.

A large part of Priceline’s (PCLN) growth in the past has come from acquiring smaller companies all over the world. It had to raise debt to finance some of these acquisitions.

For the third quarter of 2017, Priceline’s (PCLN) revenue rose 20.2% YoY or year-over-year to $4.4 billion, driven by strong gross bookings growth of 19% YoY.

Hotel accommodations have historically driven Priceline’s growth. During the third quarter of the year, Priceline’s global accommodation business booked 178 million room nights.

The Priceline Group (PCLN) reported its third-quarter financial results after market hours on November 6. PCLN beat analyst estimates for both revenues and earnings.

At the end of 2Q17, Priceline (PCLN) had $6.4 billion cash on its balance sheet.

Priceline (PCLN) trades at a forward PE (price-to-earnings) multiple of 25.2x.

On October 19, Priceline (PCLN) announced its $450.0 million investment in China-based Meituan–Dianping.

For 3Q17, Priceline’s management expects its gross profit to increase 15.5%–20.5%.

Analysts expect Priceline’s fiscal 2017 revenues to grow 16.7% YoY to $12.5 billion, which is slightly lower than the 16.5% YoY growth seen in 2016.

In 2Q17, Priceline’s (PCLN) gross bookings grew 16.4% year-over-year to $20.8 billion.

Current valuation Southwest Airlines (LUV) has a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 7.1x. This is the highest multiple among the major airline carriers and is higher than its average valuation of 6.3x since September 2008. Peer comparisons American Airlines (AAL) is trading at a similar valuation […]

Analysts’ recommendations Of the 17 analysts tracking Southwest Airlines (LUV), 36.8% of the analysts (seven analysts) gave a “strong buy” rating on the stock, while another 47.4% (nine analysts) gave a “buy” rating. The remaining 15.8% (three analysts) gave a “hold” rating. None of the analysts gave a “sell” or “strong sell” rating on the […]

For fiscal 2018, LUV’s improving unit revenue environment is expected to increase revenue growth to 5.9% YoY to $22.4 billion.

Southwest Airlines ended 3Q17 with ~$3.0 billion in cash on its balance sheet.

Southwest Airlines’ fuel costs rose 10.1% year-over-year to $1.96 per gallon.

Southwest Airlines’ (LUV) 3Q17 capacity grew 3.1% year-over-year to ~39.1 billion miles.

Southwest Airlines (LUV) reported its 3Q17 earnings on October 26. LUV missed its consensus estimates for revenues while beating its estimates for earnings per share.

Analyst views Of the 22 analysts tracking Hyatt (H), two analysts (9.1%) have a “strong buy” rating on the stock, and three analysts (13.6%) have a “buy” rating. These analysts were surveyed by Reuters. Only one analyst has changed the rating from “strong buy” to “buy” after the company’s 2Q17 earnings. Sixteen analysts (72.7%) maintained […]

Current valuation Hyatt (H) is trading at a forward EV-to-EBITDA[1. enterprise value to earnings before interest, tax, depreciation, and amortization] multiple of 11.2x. The current valuation is lower than its average valuation of 12.2x since January 2010. Peer comparison Hyatt is trading at one of the lowest multiples among its peers. Wyndham Worldwide (WYN) is trading […]

Hyatt’s debt Hyatt’s (H) total debt increased from $1.6 billion at the end of 2016 to $1.7 billion at the end of 1Q17. Its debt remained constant at $1.7 billion at the end of 2Q17.  Hyatt’s debt has fluctuated from $1.3 billion to $1.7 billion for the past five years, thanks to its routine acquisitions […]

Second breach in two years On October 12, 2017, Hyatt revealed that its payment system had been breached. There was unauthorized access detected in 41 hotels in 11 countries, exposing customer credit card information at these locations. About 50% of these hotels were located in China. *Other affected countries and territories include Brazil, Colombia, Guam, Indonesia, […]

Hyatt’s RevPAR (revenue per available room) for 2Q17 rose 2.4% in constant dollars and 2.9% year-over-year in constant currency terms across its systemwide properties.

Hyatt (H), which is expected to report its 3Q17 results on November 2, is the only major hotel stock to fall in October. Hyatt stock has fallen 0.74% month-to-date.

Currently, American Airlines (AAL) is trading at a forward EV-to-EBITDA ratio of 6.7x.

Only four airlines—Delta Air Lines (DAL), Southwest Airlines (LUV), American Airlines (AAL), and Alaska Air Group (ALK)—pay dividends to investors.

At the end of 2Q17, American Airlines had ~$6.9 billion of cash on its balance sheet.

JetBlue Airways (JBLU) started its service from Atlanta at the end of March 2017. Now it’s increasing its service from Atlanta to Orlando, Fort Lauderdale, and New York.

JetBlue Airways (JBLU) is expected to release its third-quarter earnings on October 24, 2017. In this series, we’ll look at its expansion plans, declining profitability, and valuations.

Delta Air Lines (DAL) has a forward EV-to-EBITDA multiple of 5.6x. That’s higher than its average valuation of 5.4x from January 2009 to date.

Delta Air Lines (DAL) increased its dividend payout 50.0% in 3Q17, resulting in ~$0.31 dividend per share. At that rate, DAL has an indicated dividend yield of 2.3%.

At the start of 2017, Delta Air Lines (DAL) raised its debt by ~$2.0 billion in order to reduce its pension plan liability.

In December 2016, Delta Air Lines (DAL) placed an order for 75 CS100 Bombardier jets. This huge order was the first for these jets and a huge relief for Bombardier.

Delta Air Lines’ (DAL) average traffic increased 3.4% YoY to 61.0 million passenger miles for 3Q17. For the first nine months of 2017, traffic has increased 2.1% to 166.5 billion miles.

Delta Air Lines (DAL) reported its 3Q17 results on October 11, 2017. It managed to beat Wall Street analysts’ estimates for both revenue and profits. Its revenue rose 5.5% YoY.

When crude oil prices peaked at $100 per barrel, labor costs were an airline’s second largest cost. Thanks to the fall in fuel costs, labor is now the largest expense.

With over 9,000 hotel rooms, Sands China (LVS) has the largest share of the total hotel inventory in the Macao region, at 60%.

Historically, JBLU has seen the highest capacity growth among the seven major airlines.

UTC (UTX) stock has generated more than 130% returns over the last decade. This is nearly double the S&P index returns during the same time period.

High yield Despite the positive run-up Boeing (BA) stock has enjoyed in 2017, its current indicated dividend yield is 2.2%. Boeing’s dividend yield is now lower than the Dow Jones Industrial Average dividend yield of 2.7%. Peer Lockheed Martin (LMT) has an indicated dividend yield of 2.4%, United Technologies (UTX) has an indicated dividend yield […]

The Canadian Air Force placed an order for 65 Lockheed Martin (LMT) F-35 fighter jets for $30 billion. The CAF canceled the order and replaced it with 18 Boeing CF-18 aircraft for $5.2 billion.

As of September 21, 30.8% (four analysts) out of the 13 analysts tracking Spirit Airlines (SAVE) had a “strong buy” recommendation.

The problems for Spirit Airlines (SAVE) started in early May, when the company ended up canceling hundreds of flights.

After five months of improvement in capacity utilization, Spirit Airlines (SAVE) is back to its old ways. The carrier’s capacity growth has outpaced traffic growth…

Since JetBlue Airways’ (JBLU) traffic growth has been lagging behind its capacity growth, utilizations have fallen for the third straight month.

The JetBlue Airways (JBLU) stock is down ~1.6% since September 14.

As of September 19, 2017, one analyst out of the 15 analysts tracking JetBlue Airways (JBLU) had a “strong buy” recommendation on the stock.

For 3Q17, JetBlue is expecting unit costs (also known as cost per available seat mile or CASM-ex) to rise in the range of 1.5% to 3.5%.