For Immediate Release
Chicago, IL – May 27, 2022 – Today, Zacks Equity Research discusses Delta Air Lines DAL, Southwest Airlines LUV and Alaska Air Group ALK.
Industry: Airline
Link: https://www.zacks.com/commentary/1929456/3-airline-stocks-to-stick-to-despite-steep-fuel-costs
The recent oil price surge does not bode well for bottom-line growth of the Zacks Airline industry players. This is because fuel expenses are a significant input cost for the aviation space. However, improving air-travel demand is a major positive.
With passenger revenues increasing despite the elevation in one of its major input costs, the industry is recovering fast from the pandemic lows. Airline players like Delta Air Lines, Southwest Airlines and Alaska Air Group are likely to benefit from robust demand for air-travel.
Industry Overview
The Zacks Airline industry houses players engaged in transporting passengers and cargoes to various destinations, globally. Most operators maintain a fleet of multiple mainline jets in addition to several regional planes. Operations are aided by their regional airline subsidiaries and third-party regional carriers.
Additionally, industry players utilize their respective cargo divisions for offering a wide range of freight and mail services. The players invest substantially to upgrade technology. The industry, apart from comprising legacy carriers, includes low-cost players.
The well-being of the companies in this group is linked to the health of the overall economy. For example, the industry was one of the worst-hit corners by the pandemic with passenger revenues taking a severe beating. The subsequent focus on boosting cargo revenues is a positive.
Key Themes Governing the Airline Industry
High Fuel Costs Limit Bottom-Line Growth: The current scenario of rising fuel costs is denting the bottom line of the airlines. Oil price is moving northward, mainly due to supply concerns triggered by the Russia-Ukraine war. Notably, oil price escalated 33% in…