Andy Wang visits The Watch List with Nicole Petallides.
A U.S. district Judge blocked the Spirit (SAVE)-JetBlue (JBLU) merger on Tuesday. Andrew Wang and Robby Silk discuss the airline industry. They talk about expectations for airline earnings, as well as airline stocks to watch. Tune in to find out more about the stock market today.
Andy's notes:
Airlines are highly cyclical industry where profits can disappear quickly
- Delta stock decline 10% on its 4Q earnings report so peers like United Air and American followed
- The market did not like the outlook for the 1Q and full year guidance
- Growth is slowing, nonfuel costs are rising, airlines continue building capacity, and Delta lowered its earnings and cash flow expectations in 2024
- Nonfuel cost per available seat mile to rise around 3% in Q1
Peak travel?
- Travel in 2024 could moderate to more normal growth levels
- Airlines historically derived as much as 75% of its revenues on some flights business travel
- Corporate airline ticket sales are moderating back toward trend. Down 20-25% vs 2019.
Spirit-JetBlue Merger
- Spirit is pressing JetBlue for an appeal but many are not optimistic for a win there
- Need to restructure their 2025 debt. That’s debt that comes due next year at $1.1B
- Company will report its Q4 results on Feb 8
Boeing
- Getting the 737 Max 9 safely back in service is a top priority for the FDA, Boeing, and airlines.
- The fallout for Boeing will likely stretch beyond the Max 9
- Orders strong in 2023; 1.5X book to bill; double what they were delivering
