While no major changes in the stock price performance were registered in the past one week, trends mostly remained bearish for Airline stocks.

Among the major events that vied for attention, Delta Airlines Inc. (DAL) and Southwest Airlines Co. (LUV) reported hikes in investor returns while GOL Linhas Aereas Inteligentes S.A. (GOL) posted wider-than-estimated loss.  
Recap of the Past One Week’s Most Important Stories

1.    JetBlue Airways Corporation (JBLU) registered strong traffic growth in April, up 6.1% year over year, representing the third consecutive month of high traffic. Consolidated capacity was also up 5.9% year over year and load factor grew 20 basis points. (Read More: April Traffic Flies High at JetBlue)

2.    Within a year of enhancing its shareholders’ return, Delta Airlines again hiked its dividend and authorised a new share repurchase program to gain investors’ confidence. The company’s board of directors approved a $2 billion share buyback program through 2016 and raised quarterly dividend by 50%. (Read More: Delta to Boost Shareholders Wealth)

3.    Southwest Airlines enhanced its shareholders’ wealth, just days after rival Delta Airlines increased its own, by approving a $1 billion share buyback program and a 50% hike in its quarterly dividend. This marks the company’s 151st consecutive dividend pay-out. The new amount represents an annualized dividend of 24 cents and a yield of around 1%. (Read More: Southwest Airlines to Boost Shareholder Wealth)

4.    GOL Linhas reported its first quarter financial results that were hurt considerably due to a decline in domestic supply, record high jet fuel prices and depreciation of the Brazilian real against the dollar.

The company posted loss that was wider than the year-ago quarter number as well as the Zacks Consensus Estimate. (Read More: GOL Q1 Loss Wider than Expected). The company also reported its traffic results in which it recorded a rise in load factor to 76.8%.

5.    In line with airline customer satisfaction scaling new heights in North America, Alaska Airlines Group Inc. (ALK) topped the 2014 survey conducted by J.D. Power for the seventh consecutive year. The carrier also earned the leading position in terms of quality and usability of its frequent flier program. (Read More: Alaska Airlines Tops Satisfaction Survey)

Performance

The following table shows the price movement of the major Airline players over the past 5 trading sessions and during the last 6 months:
 

Over the trailing 5 days, most of the airline stocks witnessed a plunge except for JetBlue Airways, Southwest Airlines and Hawaiian Holdings Inc. (HA).

Of these positively performing stocks, JetBlue Airways ranked highest with almost 1% gain in stock prices over the trailing 5 days. However, Hawaiian Holdings and Southwest Airlines gained marginally.

On the other hand, the biggest losers include GOL Linhas, United Continental Holdings, Inc. (UAL), Delta Air Lines and American Airlines Group Inc. (AAL), stocks of which dropped 6.9%, 3.6%, 1.59% and 1.5%, respectively, over the last 5 trading sessions.

On the other hand, in terms of performance over the past 6 months, most of the stocks have fared reasonably well with the exception of Copa Holdings SA (CPA), which dropped 6.43% over the period. The biggest gainer in the 6-month span was Hawaiian Holdings sporting substantial growth of 77.5%.

What’s Cooking in the Airline Biz?

The beginning to the current week witnessed some key events in the industry. While Southwest Airlines announced its plans to extend its international destinations apart from adding new non-stop flights from Dallas Love Field, Alaska Airlines is now looking for regulatory approvals to kick start two new non-stop flights from Portland, OR, to Los Cabos and to Puerto Vallarta, Mexico.

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Delta Airlines will launch a direct flight from the Lincoln Airport to the world’s busiest airport, Atlanta’s Hartsfield-Jackson International.

The flight starts Sept. 8, providing Nebraska travelers more connections to the Southeast and international destinations. Delta already provides several direct flights daily from Omaha’s Eppley Airfield to Atlanta.

Lincoln Airport officials said the new flight schedule will be convenient for business travelers, leaving Lincoln at 7 a.m. Central time and arriving in Atlanta at 10:17 a.m. Eastern time. The return flight leaves Atlanta at 7:15 p.m. and returns to Lincoln at 8:42 p.m.

Delta operated a similar flight in 2009, but an inconvenient schedule deterred passengers from taking it, said John Wood, executive director of the Lincoln Airport.

He said the airport is making the flight available again through a $750,000 federal grant that will provide Delta guaranteed revenue. However, if travelers support the service, the funds won’t be necessary, he said.

“We know there’s a demand for service to the Southeast, we expect fares to be competitive and we have a convenient schedule,” Wood said. “We believe that combination will put passengers on the planes.”

Delta Airlines will launch a direct flight from the Lincoln Airport to the world’s busiest airport, Atlanta’s Hartsfield-Jackson International.

The flight starts Sept. 8, providing Nebraska travelers more connections to the Southeast and international destinations. Delta already provides several direct flights daily from Omaha’s Eppley Airfield to Atlanta.

Lincoln Airport officials said the flight schedule will be convenient for business travelers, leaving Lincoln at 7 a.m. Central time and arriving in Atlanta at 10:17 a.m. Eastern time. The return flight leaves Atlanta at 7:15 p.m. and returns to Lincoln at 8:42 p.m.

Delta operated a similar flight in 2009, but an inconvenient schedule deterred passengers from taking it, said John Wood, executive director of the Lincoln Airport.

He said the airport is making the flight available again through a $750,000 federal grant that will provide Delta guaranteed revenue. However, if travelers support the service, the funds won’t be necessary, he said.

“We know there’s a demand for service to the Southeast, we expect fares to be competitive, and we have a convenient schedule,” Wood said. “We believe that combination will put passengers on the planes.”

Following its competitors Delta Airlines and United Airlines, American Airlines last month announced changes for redeeming miles on its AAdvantage frequent flier program. AAdvantage members need to get crackin’ if they want to redeem miles at current rates; the new, largely less favorable program kicks in on June 1.

Not only is the new system costlier for fliers, it’s also a lot more complicated. That’s because it combines the current AAdvantage program with the Dividend Miles frequent flier program of US Airways, which American formally acquired last December.

The two airlines have been integrating by bits and pieces since. Although the Dividend Miles program will continue to exist, at least for the time being, the two programs will essentially have the same rewards.

Changes ahead for the mileage program of the new American Airlines. (Photo credit: Aero Icarus)

To illustrate, let’s play “one of these things is not like the other.” Both airlines are getting rid of three-tiered redemption systems. American’s program of two “MileSAAver” plans currently offers better deals but limited availability, while “AAnytime” miles have no blackout dates but require significantly more miles. Dividend Miles redemption rates are based on demand.

Here’s the mileage required for domestic round trip tickets in economy class under each of the old programs:

 American AAdvantage          US Airways Dividend Miles

To Europe, as an example, economy class rates currently look like this:

 American AAdvantage          US Airways Dividend Miles

On its European routes, US Airways also currently has an “off-peak” level, 35,000 miles round trip.

Going forward, each airline’s three-tier systems are giving way to five choices in each class of service. MileSAAver and AAnytime categories are being further divided into numbered “levels” based on timing and flight load.

For domestic travel, the new rates mirror the current Dividend Miles program – bad news for AAdvantage members. MileSAAver awards, the best deal, will be available in limited quantities and usually far in advance.

New AAdvantage Mileage Requirements:

U.S. Domestic Round Trip Tickets

Fliers foresighted – or lucky – enough to snag lowest tier tickets won’t notice much change, but AAnytime fliers should pray that the flight isn’t already well sold; otherwise they’ll be shelling out 10,000 more miles than they used to. There’s also an AAnytime Level 3, for “peak of the peak” times like holiday weekends. These rates are unannounced, which makes me think of seeing “market price” next to lobster on a restaurant menu (read: “if you have to ask, you probably can’t afford it”).

To Europe, the new chart looks like this:

New AAdvantage Mileage Requirements:

U.S. to Europe Round Trip Tickets

Its
Southwest Airlines Co.

‘s (
LUV

) turn now to enhance its shareholders’ wealth just days after
rival
Delta Airlines Inc.

(
DAL

) increased its own. The airline’s board of directors has approved
a $1 billion share buyback program along with a 50% hike in its
quarterly dividend to 6 cents per share from the prior-paid 4
cents.

The $1 billion share repurchase authorization includes a $200
million buyback program to be completed on an accelerated basis.
Meanwhile, this is the 151st consecutive dividend payout for
Southwest Airlines, which translates into an annualized dividend of
24 cents and a dividend yield of around 1%. The hiked dividend will
be paid on Jun 25, 2014 to shareholders of record on Jun 4,
2014.

Recently, the company completed its previous $1.5 billion share
repurchase program, which also included a $200 million accelerated
share buyback launched in Feb 2014. During the first quarter of
2014, Southwest Airlines paid $56 million in dividends and
repurchased 12 million shares for an approximate amount of $315.0
million.

This latest bid to enhance shareholders’ return depicts
Southwest Airlines’ confidence in continuing its sturdy financial
performance, already reflected in the impressive first-quarter
results. To us, the increased shareholders’ return does not come as
a surprise. The company’s bottom line has managed to beat the Zacks
Consensus Estimate in the past three quarters with an average
surprise of 8.51%.

Southwest Airlines is the second major air transportation
carrier after Delta Airlines in terms of dividend payment as other
traditional carriers like
United Continental Holdings Inc.

(
UAL

) and
JetBlue Airways Corporation

(
JBLU

) do not distribute dividends at present.

Recently, Delta Airlines approved a $2 billion share repurchase
program that is expected to complete within 2016, in addition to
raising its 6 cents quarterly dividend by 50% to 9 cents per share
effective from the third quarter of 2014. The carrier plans to
return $2.75 billion to shareholders by the end of 2016.

Southwest Airlines has been leveraging from an improving U.S.
economy, which in turn is propelling stronger demand within the
domestic market. We believe the company is expected to benefit
further from fleet restructuring, introduction of international
services, repeal of the Wright amendment and the expected
completion of the AirTran integration.

Moreover, the slot wins and subsequent expansion of operations
from the Reagan and LaGuardia airports should boost its future
prospects. We thus remain bullish on the stock with a Zacks Rank #1
(Strong Buy).

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Research

Its Southwest Airlines Co.’s (LUV) turn now to enhance its shareholders’ wealth just days after rival Delta Airlines Inc. (DAL) increased its own. The airline’s board of directors has approved a $1 billion share buyback program along with a 50% hike in its quarterly dividend to 6 cents per share from the prior-paid 4 cents.

The $1 billion share repurchase authorization includes a $200 million buyback program to be completed on an accelerated basis. Meanwhile, this is the 151st consecutive dividend payout for Southwest Airlines, which translates into an annualized dividend of 24 cents and a dividend yield of around 1%. The hiked dividend will be paid on Jun 25, 2014 to shareholders of record on Jun 4, 2014.

Recently, the company completed its previous $1.5 billion share repurchase program, which also included a $200 million accelerated share buyback launched in Feb 2014. During the first quarter of 2014, Southwest Airlines paid $56 million in dividends and repurchased 12 million shares for an approximate amount of $315.0 million.

This latest bid to enhance shareholders’ return depicts Southwest Airlines’ confidence in continuing its sturdy financial performance, already reflected in the impressive first-quarter results. To us, the increased shareholders’ return does not come as a surprise. The company’s bottom line has managed to beat the Zacks Consensus Estimate in the past three quarters with an average surprise of 8.51%.

Southwest Airlines is the second major air transportation carrier after Delta Airlines in terms of dividend payment as other traditional carriers like United Continental Holdings Inc. (UAL) and JetBlue Airways Corporation (JBLU) do not distribute dividends at present.

Recently, Delta Airlines approved a $2 billion share repurchase program that is expected to complete within 2016, in addition to raising its 6 cents quarterly dividend by 50% to 9 cents per share effective from the third quarter of 2014. The carrier plans to return $2.75 billion to shareholders by the end of 2016.

Southwest Airlines has been leveraging from an improving U.S. economy, which in turn is propelling stronger demand within the domestic market. We believe the company is expected to benefit further from fleet restructuring, introduction of international services, repeal of the Wright amendment and the expected completion of the AirTran integration.

Moreover, the slot wins and subsequent expansion of operations from the Reagan and LaGuardia airports should boost its future prospects. We thus remain bullish on the stock with a Zacks Rank #1 (Strong Buy).

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• Airline Industry
• Investment Company Information
• Delta Airlines
• Southwest Airlines

For Immediate Release
 
Chicago, IL – May 16, 2014 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Alaska Airlines Group Inc. (ALK–Free Report), Delta Airlines Inc. (DAL–Free Report), JetBlue Airways Corp. (JBLU–Free Report), Southwest Airlines Co. (LUV–Free Report) and Starbucks Corporation (SBUX–Free Report).
 
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Here are highlights from Thursday’s Analyst Blog:

Alaskan Airlines Tops Satisfaction Survey

In line with airline customer satisfaction scaling new heights in North America, Alaska Airlines Group Inc. (ALK–Free Report) has topped the 2014 survey conducted by J.D. Power for the seventh consecutive year. The carrier has also earned the leading position in terms of quality and usability of its frequent flier program.

J.D. Power’s 2014 North America Airline Satisfaction Study takes into consideration the response of 11,300 customers, who have flown across the continent in different traditional airlines between March 2013 and March 2014. These customers have ranked airlines on the basis of seven standards, which include fees, reservations, check-ins, aircraft, boarding/baggage and flight crew.

Alaska Airlines scored 737 points on a 1,000 point scale, which is 20 points more than last year and 44 points ahead of the second place occupant, Delta Airlines Inc. (DAL–Free Report). Overall passenger satisfaction from traditional airlines stood at 712, marking a 17 point increase over last year despite more fees for baggage check. Among low cost carriers, JetBlue Airways Corp. (JBLU–Free Report) has emerged as the winner with 789 points followed by Southwest Airlines Co. (LUV–Free Report) and Canada’s WestJet.

Meanwhile, in the loyalty program satisfaction report, the carrier was ranked on the basis of the ease of redeeming miles, account maintenance, reward program terms, ease of earning miles, benefits available and customer service. The report was based on the responses of 3,800 loyalty program members surveyed in March 2014.

The SeaTac-based company has leveraged from a high number of partner carriers and 700 global destinations. Loyal customers can earn and redeem points when they fly with one of Alaska Airlines’ partners or when they stay at one of its partner hotels. Further, the members can use a convenient online calendar to buy one-way award tickets over the net and book multiple airlines in one reservation.

We believe the J.D. Power study reaffirms the confidence that customers hold in the Alaska Airlines brand name despite rising fees and uncomfortable sitting remaining a constant concern for the fliers. It will also help strengthen its goodwill against other traditional carriers in the region.

Alaska Airlines reported better-than-expected earnings of $1.28 per share in the first quarter of 2014 handily beating the Zacks Consensus Estimate of $1.20. The company also recently approved a $650 million share repurchase program to boost its shareholders’ wealth.

Alaska Air currently carries a Zacks Rank #1 (Strong Buy).

Starbucks to Expand in Latin America

Starbucks Corporation (SBUX–Free Report) recently announced its plans to expand its Latin American presence by opening stores in Colombia, Bolivia and Panama this year and early next. Currently, Starbucks operates more than 500 stores in Latin American countries like Chile, Mexico and Argentina.

As announced in August last year, Starbucks will open its first store in Colombia in the capital city of Bogota in mid-summer 2014. The coffee giant plans to open more cafés in the city as well as in other major Colombian cities over the next five years. The Colombian cafés will serve only locally-grown espresso and coffee.

The Colombian cafés will be run by a joint venture between Mexican restaurant company Alsea, and Colcafe, a subsidiary of Grupo Nutresa (a Colombian food processing company). Both Alsea and Colcafe have been Starbucks’ Latin American business partners for the past few years.

Alsea operates more than 500 Starbucks stores across Mexico, Argentina and Chile. Starbucks has been manufacturing/roasting coffee with Colcafe in Colombia since 2008 and also developed its popular VIA Ready Brew. Starbucks has now expanded its manufacturing agreement with Colcafe to roast espresso, drip and packaged coffee to be supplied at the new Colombian stores.

After Colombia, the company will enter the Bolivian market, with the first store planned to be opened later this year. The first Starbucks café will come up in the commercial center of Santa Cruz in partnership with Starbucks’ long-time business partner in the Andean region, Delosi. The partners plan to open another 10 cafés in Bolivia over the next several years.

In Panama, the first store is scheduled to be opened in early 2015 in partnership with Corporación de Franquicias Americanas (:CFA), Starbucks’ long-time Central American business partner. The partners plan to open more than 20 cafés in Panama over the next several years.

Starbucks carries a Zacks Rank #3 (Hold).

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The aircraft was flying 38,000 feet when the pilot informed passengers over the intercom he would be making an emergency landing.

The Boeing 767-300, which was travelling from Atlanta to Los Angeles, landed in Albuquerque 15 minutes after the announcement was made.

There was no loss of cabin pressure during this time.

Jennifer Squires, who was a passenger on the plane at the time, told CNN: “I immediately thought someone was ill. A few minutes later he (the pilot) told us that because of pressure, the windshield in the cockpit arched, bubbled, and then shattered.”

.@Delta flight from Atlanta to Los Angeles diverted after windshield cracks
http://t.co/Zqn3M5H1Rj pic.twitter.com/4Em7OtTTKx

; WPTV (@WPTV) May 6, 2014

“As I exited the plane, I asked if I could see the damage,” Ms Squires, who also took the picture, said. “The pilot and co-pilot were in the cockpit, and I thanked them for getting us down safely.”

The Federal Aviation Administration stressed only the exterior pane had shattered, while the interior had stayed in tact.

“Our initial information was that the outside part of the windshield shattered but the interior part remained intact,” FAA spokesman Lynn Lunsford, told CNN.

“All windows and windshields are at least double paned,” Delta spokesman Morgan Durrant said. “This is a rare occurrence but the established procedure is to divert.”

The landing is the latest in a series of incidents for the airline. In March, one of their planes , which was carrying 179 passengers, lost a wing panel mid-flight.

Meanwhile in February, the airline incurred the wrath of online mothers by telling one woman she had to cover up before breastfeeding on a flight.

That same month, a flight had to be diverted while on route to Salt Lake City after a passenger became unruly and began screaming on the plane when her sexual advances were rejected by another pasenger.

The most important thing to know about Delta’s transition over the past decade is this: today, Delta gets a revenue premium of 107%. That is to say, in the first quarter, Delta’s revenue per available seat mile was seven points higher than the airline average because people choose to fly on Delta.

Before it sought bankruptcy protection in 2005, Delta had revenue per available seat mile that was 86% of the industry average. By the first quarter of 2007, Delta executives were pleased to proclaim that RASM was 96% of the industry average. The carrier emerged from bankruptcy protection on April 30, 2007.

While all of the major airline bankruptcies in the first decade and a half of the 21^st century have been successful, enabling the carriers to profitably restructure, Delta’s was probably the most uniquely successful.

The bankruptcies all led to cost-cutting, primarily labor cost cutting, and enabled the final stages of post-deregulation consolidation to play out. Meanwhile, soaring oil prices led the industry to reduce capacity. And the idea of ancillary revenues caught on rapidly after United began to charge $25 for a second checked bag in 2008.

The American and US Airways bankruptcies both led to mergers enabling takeovers by an aggressive young management team from America West Airlines. United sat in bankruptcy for three years waiting for a merger. In 2010, four years after emerging, it finally enticed Continental. Today, given United’s problems, it is worth asking whether Continental management would make the same decision again.

As for Delta, it used bankruptcy to remake itself. Delta has one of U.S. airline industry’s best assets: the Atlanta hub, the biggest single airline hub in the world.

Before the bankruptcy, Atlanta was squandered, used largely to connect passengers between the Northeast and Florida – a leisure market with little potential to provide revenue premiums. Now Atlanta has 970 daily departures to 210 destinations including 62 international destinations.  Overall, Delta serves 59 countries.

During an investor conference in 2007, Delta executives talked of their hopes. Executive Vice President Glen Hauenstein said he was seeking Heathrow slots. Not serving Heathrow, “is like fighting with one hand behind our back,” he said. In 2013, Delta acquired 49% of Virgin Atlantic, which brought enough slots to provide about two dozen daily round-trip Heathrow flights.

Also at the 2007 conference, President Ed Bastian talked of trying to secure a China route. “We fully expect to get China next year,” Bastian said. “Shame on us if we don’t.”   In 2008, Delta merged with Northwest, acquiring a China presence.

Also in 2007, Delta CEO Jerry Grinstein, who had led the bankruptcy reorganization, said Los Angeles should provide another gateway to Asia. Okay, Delta went another direction there. Following Hauenstein’s vision, it is seeking to build its trans-Pacific hub in Seattle. This summer it will serve 10 international destinations from Seattle

Finally, Bastian said in 2007 that boosting its New York presence was Delta’s number one priority. Combining totals at LaGuardia and Kennedy airports, Delta has the most service, but “we’re not getting our share of the premium,” Bastian said.

Four days ago, on May 7, Bastian declared at an investor conference that Delta’s goal in 2014 “is to be profitable, for the first time in Delta history, in New York.”

This week, Delta announced it will boost its dividend 50% and buy back $2 billion worth of its shares. At the investor conference, Bastian said Delta is not stopping here. He said the carrier “should be able to continue to improve” on its 107% revenue premium.

The three global U.S. carriers “have very similar structures and networks,” Bastian said.  “It’s really the quality of the service that matters (because) customers choose which airline they’re going to fly.”

English: “Fly Delta Air Lines” marker (Photo credit: Wikipedia)