LUV gets FAA approval, AAL, ALGT in focus

On By Littum

Last week, the US Federal Aviation Administration (FAA) completed the safety-related review of the Southwest Airlines LUV following a series of incidents involving the Dallas-based carrier’s flights. The FAA review did not identify any significant safety concerns.

American Airlines AAL operations were briefly interrupted on Christmas Eve due to a technological fault. Allegiant Travel Company ALGT raised its expectations for earnings per share, primarily driven by healthy bookings in the post-election period and strong demand for holiday travel.

Read the latest airline overview here.

1. Allegiant now expects its fourth-quarter 2024 capacity (measured in available seat miles) for scheduled flights to increase by 1.8% year-on-year. This is an improvement on the previous expectation of 1.5%. Total system ASM is now expected to increase by 1.9% year-on-year (previously: an increase of 1.5%). Earnings per stock (airline) expected to be in the $2.50-$3.00 range (previous: 50 cents-$1.50). Fourth quarter consolidated EPS, excluding special items, is expected to be in the range of $1.75-$2.25. This marks an improvement from the previous expectation of breakeven at $1 per share. stock.

2. Southwest Airlines flights were involved in a number of security-related incidents between May and July this year. This included a LUV aircraft flying very low off the ground into Tampa. As a result, the FAA increased safety oversight of the LUV to ensure the carrier was complying with federal safety regulations and began an audit in July. The FAA concluded its review and gave the all-clear on LUV’s safety procedures.

LUV currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

3. Everyone American Airlines flights in the United States were grounded for one hour on December 24 due to a network hardware-related issue involving DXC technology DXC, one of its suppliers. The disruption also resulted in some AAL flights being delayed. The technological error caused harassment of passengers on one of the busiest travel days. The error was resolved and normal operations resumed. DXC is responsible for maintaining AAL’s flight operating systems.

The following table shows the price development for the major airlines over the past week and over the past six months.

Zacks Investment Research
Zacks Investment Research

Image source: Zacks Investment Research

The NYSE ARCA Airline Index rose 2.5% to $68.2 as most stocks in the table above traded in the green. Over the past six months, the NYSE ARCA Airline Index has risen 19.7%.