The Zacks Analyst Blog Highlights: Republic Airways Holdings, GOL Linhas, Delta Air Lines, Southwest Airlines and JetBlue Airways
Zacks Equity Research
Updated
For Immediate Release
Chicago, IL – March 03, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Republic Airways Holdings (RJET), GOL Linhas (GOL), Delta Air Lines (DAL), Southwest Airlines (LUV) and JetBlue Airways Corp. (JBLU).
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Here are highlights from Wednesday’s Analyst Blog:
Airline Stock Roundup
The past week saw an array of developments in the airline space. Indianapolis-based Republic Airways Holdings ( RJET) filed for Chapter 11 bankruptcy protection citing pilot shortage as the primary reason for its action. Furthermore, struggling carrier GOL Linhas ( GOL) stated that it intends to trim routes in an attempt to counter headwinds posed by the deteriorating Brazilian economy. In addition, the Brazilian company announced that it will receive a significant cash inflow.
Moreover, according to a Reuters report, foreign ownership in Brazilian carriers has been increased to 49% from 20%. Shares of Gol Linhas reacted positively to the news.
Atlanta, GA-based Delta Air Lines (DAL) also grabbed headlines with Moody's Investors Service, the rating services arm of Moody's, unveiling its bullish view on the carrier. Meanwhile, Southwest Airlines (LUV) received encouraging news on the labor front with its flight instructors ratifying a deal for higher pay. Low-cost carrier JetBlue Airways Corp. (JBLU) was also in the news by virtue of its efforts to strengthen its footprint in Latin America.
On the price front, the NYSE ARCA Airline index decreased 2.23% to $84.48 in the course of last week, with oil prices moving north.
Read the last Airline Stock Roundup for Feb 24, 2016 .
Recap of the Past Week’s Most Important Stories
1. Republic Airways Holdings, the parent company of Republic Airlines and Shuttle America, sought bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of New York. The carrier, plagued by a dearth of pilots, has seen its revenues dwindling in the recent past (read more: Republic Airways Falls Prey to Pilot Shortage, Files for Bankruptcy ).
2. In a bid to overcome its struggles, GOL Linhas announced that it intends to reduce landings and takeoffs of its flights by at least 6%. The carrier also aims to discontinue services to seven destinations this year. GOL also said that it will return five planes to leasing companies apart from taking delivery of only one aircraft by Dec 31, 2017 as opposed to the originally planned 15.
Moreover, the carrier will receive a significant cash injection (up to one billion reais) as it aims to bolster its balance sheet. The São Paulo-based carrier also said that the Brazilian Securities Commission has cleared its efforts to change the ratio of its American Depositary Shares to preferred shares from 1:1 to 1:10.
3.According to Moody's Investors Service, Delta is well-equipped to handle the situation even if fuel prices move up. Moody’s is also highly impressed with Delta’s efforts to reduce its debt levels. The firm believes interest expenses will drop further at Delta as it is expected to continue with its debt reduction strategy. This should help mitigate the pressure on the bottom line in the event of oil prices moving north (read more: Delta Air Lines Receives Vote of Confidence from Moody's ).
4. Members of the Transport Workers Union Local 557, representing the flight instructors of Southwest Airlines, ratified a four-year contract with the carrier, which guarantees them higher pay, other financial benefits and improved working conditions. Approximately 68% of the votes cast were in favor of the deal, which becomes amendable on Dec 31, 2019. The tentative deal was inked in Jan 2016.
5. In a bid to expand further in Latin America, JetBlue Airways has started operating daily flights between Fort Lauderdale-Hollywood International Airport and Quito’s Mariscal Sucre International Airport in Ecuador. Quito is increasingly gaining popularity as a holiday destination (read more: JetBlue Adds Ecuador Flights, Latin-American Plans on Track ).
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