ACDVF - Delta Air Lines leads down day for airline stocks

2023-03-15 14:55:22 ET

Delta Air Lines ( NYSE: DAL ) fell over 7% on Wednesday, leading a dip for airline stocks amid a spate of earnings updates and general jitters emanating from the financial sector.

The Atlanta-based airline provided a Q1 forecast reflecting the expectation that revenue will grow to between $11.8B and $12.1B, below the $12.5B consensus on Tuesday. Additionally, the carrier expects earnings per share $0.15 to $0.40 against a consensus of $0.33.

Southwest Airlines ( LUV ) -2.23% also provided an update on Tuesday, projecting a net loss for Q1 . Alaska Airlines ( ALK ) -3.53% joined those two in providing a Q1 update on Tuesday, noting elevated fuel costs for the quarter . Those updates followed a cautious guidance update from United Airlines ( UAL ) -5.82% on Monday that also cited rising fuel costs, but pilot contracts weighing on profits .

Bank of America analyst Andrew Didora noted that many investors had expected guidance hikes in the recent filings amid robust travel demand. At the least, more upbeat commentary at Tuesday’s JP Morgan Industrial’s Conference was anticipated.

“Many investors had expected positive top-line revisions at a peer conference yesterday due to resilient leisure demand and bullish bookings commentary from the airlines over the course of the quarter,” Didora told clients on Wednesday. “We were surprised that we did not see more divergence by company, particularly since international has accelerated more than domestic. This is likely a dynamic that helps the spring/summer season.”

He added that “heightened macro fears and balance sheet quality” has become a key focus amid recent financial turmoil. As such, strong performance for the industry ( JETS ) might understandably “take a pause” for  time.

Alaska Air Group ( ALK ), Air Canada ( OTCQX:ACDVF ) -4.8% , Delta Air Lines ( DAL ), Frontier Airlines ( ULCC ) -6.27% , and Southwest ( LUV ) were all Buy-rated by Didora. Allegiant Travel Company ( ALGT ) -6.92% , JetBlue Airways ( JBLU ) -2.02% , and Mesa Air Group ( MESA ) -7.12% were each rated Neutral. Finally, American Airlines Group ( AAL ) -5.29% , Hawaiian Holdings ( HA ) -3.17% , and United Airlines ( UAL ) were each assigned Sell-equivalent ratings. Spirit Airlines ( SAVE ) -0.64% was not rated.

Skywest ( SKYW ) -6.5% , Sun Country Holdings ( SNCY ) -5.75% , Volaris ( VLRS ) -4.74% , and Copa Holdings ( CPA ) -6.24% rounded out notable decliners in the airline space on Wednesday .

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