Fuel is the largest expense to airline companies accounting for nearly 30% of operating expenses. The recent plunge in the oil price due to OPEC’s reluctance to cut production in light of weak global demand would enable airline companies in enhancing the bottom line, which is indirectly proportional to the price of oil.
Today, we have shortlisted five U.S airline stocks that would benefit from the fall in oil prices and are expected to report decent operating margins and high ROE(>10.0%) for fiscal year 2014. Moreover, during the past one month, majority of the stocks have registered price gains with daily average trading volumes in excess of 100,000.
| Company Name |
Ticker |
Exchange |
Market Cap |
Last Price |
Average Volume |
Price Change (1-Month) |
Operating Margin 2014(E) |
ROE 2014(E) |
|
Copa Holdings SA |
CPA |
NYSE |
4,389.3 |
98.95 |
909,318 |
-10.4% |
19.2% |
21.1% |
|
Allegiant Travel Co |
ALGT |
NASDAQ |
2,484.4 |
142.09 |
145,858 |
9.2% |
16.6% |
26.4% |
|
Republic Airways Holdings Inc |
RJET |
NASDAQ |
650.7 |
13.07 |
468,499 |
5.2% |
15.9% |
11.1% |
|
Hawaiian Holdings Inc |
HA |
NASDAQ |
1,310.1 |
24.25 |
1,354,067 |
33.2% |
9.7% |
21.0% |
|
JetBlue Airways Corp |
JBLU |
NASDAQ |
4,493.9 |
15.40 |
9,921,172 |
16.2% |
9.0% |
11.9% |
Source: Bloomberg
Company Description
Copa Holdings SA (NYSE: CPA)
Copa Holdings SA provides international airline passenger and cargo service. The company provides scheduled flights to countries in North, Central and South America and the Caribbean. The company also has code share arrangements with Continental Airlines.
Allegiant Travel Co (NASDAQ: ALGT)
Allegiant Travel Company is a leisure travel company. The company operates a passenger airline marketed to leisure travelers in small cities.
Republic Airways Holdings Inc (NASDAQ: RJET)
Republic Airways Holdings Inc., through its subsidiaries, provides passenger services. The company operates as US Airways Express, America West Express, and American Connection. Republic provides US Airways, American and America West with portions of their regional service, including service out of Boston, Columbus, Indianapolis, New York, Philadelphia, Pittsburgh and St Louis.
Hawaiian Holdings Inc (NASDAQ: HA)
Hawaiian Holdings, Inc. provides scheduled and charter air transportation of passengers, cargo, and mail. The company provides its services among the islands of Hawaii and between Hawaii and several West Coast gateway cities and destinations in the South Pacific.
JetBlue Airways Corp (NASDAQ: JBLU)
JetBlue Airways Corporation provides nonstop passenger flight service through its Airbus A320 aircraft. The company’s airline is based in New York’s John F. Kennedy Airport and currently flies to various destinations in the United States.
