The airline industry bore the brunt of the COVID-19 pandemic’s ill effects on industry during its initial days. However, increasing vaccination rates helped the sector begin to rebound with encouraging demand over the holiday season, owing to increased consumer confidence. Most airlines cheered when…
they made it through Thanksgiving week with very low cancellation rates.
However, now the COVID’s omicron-variant threat has disrupted the airline sector. Furthermore, severe weather conditions have caused record cancellations for the industry. According to FlightAware, around 7,000 flights with at least one stop in the U.S. were canceled after Christmas Eve 2021. These cancellations are expected to persist in the near term, with cases piling up daily.
Given this backdrop, we think it could be wise to avoid airline stocks Southwest Airlines Co. (LUV – Get Rating) and JetBlue Airways Corporation (JBLU – Get Rating), which analysts have recently downgraded.
Southwest Airlines Co. (LUV – Get Rating)
LUV in Dallas, Tex., is a passenger airline company that provides scheduled air transportation services in the United States and near-international markets. The company operates a total fleet of approximately 718 Boeing 737 aircrafts. MKM Partners analysts recently downgraded LUV from ‘Buy’ to ‘Neutral.’
LUV’s total operating revenues came in at $4.68 billion for its fiscal third quarter, ended Sept. 30, 2021, up 161% year-over-year. However, its total current liabilities were $9.13 billion for the period ended September 30, 2021, compared to $7.51 billion for the period ended Dec. 31, 2020. Furthermore, its total net operating expenses were $3.95 billion, up 23.2% year-over-year.
Analysts expect LUV’s EPS to decline at a 21% rate per annum over the next five years. Also, the stock has declined 28.7% in price over the past nine months to close yesterday’s trading session at $45.24.
LUV’s POWR Ratings reflect its poor prospects. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting. It has a D grade for Stability. Click here to access the additional POWR Ratings for LUV (Growth, Value, Momentum, Sentiment, and Quality). LUV is ranked #4 of 31 stocks in the F-Rated Airlines industry.
JetBlue Airways Corporation (JBLU – Get Rating)
JBLU provides air passenger transportation services. The Long Island City, N.Y.-based concern serves 98 destinations in the 30 states in the United States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, and 23 countries in the Caribbean and Latin America. Recently, the stock was downgraded by MKM Partners analysts.
For its fiscal third quarter, ended Sept. 30, 2021, JBLU’s total operating revenues increased 300.8% year-over-year to $1.97 billion. However…
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