American Airlines announces route adjustments for late 2024 and early 2025 due to delays in Boeing 787 deliveries. Affected customers will receive alternative travel options. Despite the adjustments, American Airlines emphasizes that it will maintain service to all current destinations and operate 55 international long-haul routes during the winter season.
The US Department of Transportation (DOT) has implemented new rules requiring airlines to provide automatic refunds to passengers when flights are canceled or significantly altered. The regulations aim to simplify the refund process, reduce disputes, and impose additional costs on the airline industry, potentially impacting low-cost carriers disproportionately. The new rules cover a range of flight changes and lost baggage scenarios, extending to lost bag fees, in-flight services, and the elimination of unexpected fees.
Flight attendants at Southwest Airlines have ratified a new contract that includes pay increases totaling more than 33% over four years. The contract, which passed with an 81% approval margin, provides the largest pay raises in the history of Southwest flight attendants and sets a standard for the industry. The agreement includes raises of more than 22% on May 1 and annual increases of 3% in each of the following three years. In addition to pay raises, the contract provides industry-leading benefits, including the shortest on-duty day, the highest pay, compensation during disruptions, and paid maternity and parental leave. The deal also includes a $364 million ratification bonus for workers.
Alain Bellemare, Executive Vice President and President of International at Delta Air Lines, has sold 24,073 shares of the company’s common stock, netting over $1.17 million. The transactions occurred on April 23, with the weighted average price per share being $48.859. Following the sale, Bellemare’s direct holdings in Delta Air Lines stood at 141,451 shares. Investors often monitor insider transactions as they provide insights into how executives perceive the company’s valuation and future prospects. Delta Air Lines has been a notable performer in the Passenger Airlines industry, with a strong return over the last three months and a significant price uptick over the last six months. The company is trading at a compelling earnings multiple, with a P/E ratio of 6.12 and an adjusted P/E ratio for the last twelve months as of Q1 2024 at 7.13. Additionally, the company’s shareholder yield is high, and 9 analysts have revised their earnings upwards for the upcoming period.
The Biden Administration has issued final rules that require airlines to automatically issue cash refunds for canceled flights and significant delays, as well as better disclose fees for baggage and cancellations. The Transportation Department defines a significant delay as lasting at least three hours for domestic flights and six hours for international ones.
A new Department of Transportation rule requires airlines to provide full refunds for canceled, delayed, or significantly changed flights. This has led to a decline in airline stock prices, with United Airlines, American Airlines, Spirit Airlines, Delta, and Southwest Airlines all experiencing losses. The rule also applies to checked bag fees if baggage is delayed by more than 12 hours for domestic flights or 15-30 hours for international flights. Additionally, airlines are now required to clearly disclose “junk fees” for baggage, reservation changes, and discounts that only apply to partial flights.
JetBlue Airways Corporation reported its financial results for the first quarter of 2024, with a better-than-expected performance for March contributing to an adjusted pre-tax profit. Despite this, the company has revised its full-year guidance downward, citing increased capacity in the Latin region as a key factor impeding revenue acceleration. The airline also detailed network changes, including the closure of seven Blue cities and scaling back operations in Los Angeles and at LaGuardia Airport. Additionally, JetBlue is implementing revenue initiatives and maintaining a focus on a low-cost base. The CEO expressed confidence in the company’s profitability plan and acknowledged crew members’ dedication to safety. The Investor Day event has been postponed to the fall.
The travel industry continues to experience a surge, with air travel reaching record levels. Despite strong results from United Airlines and expectations of positive reports from other airlines this week, I maintain a hold rating on the U.S. Global Jets ETF (JETS). While the ETF appears undervalued, its momentum remains weak, and a market correction is underway. Key factors to consider include JETS’ concentrated exposure to a few airline stocks, lofty expense ratio, and neutral long-term technical outlook. Although the sector may see cyclical upswings, headwinds such as rising oil prices and JETS’ seasonal underperformance through October should be taken into account.
