The airline industry has consolidated significantly over the past decade. In addition to the massive and much-needed consolidation, airlines have cut costs, become leaner and created a new set of fees that generate billions of dollars per year in new revenue (bag fees, change-ticket fees, miscellaneous fees, charging for food, etc.).
Oil prices have plunged 54% since June 2014. Unless an airline is hedging, airline companies benefit when oil prices decline because lower fuel prices bode well for margins. While other airline stocks are acting poorly, here are a few that are acting well:
Alaska Air Group (ALK) is a holding company and has two principal subsidiaries: Alaska Airlines and Horizon Air Industries. Both operate as airlines. However, their business plans, competition and economic risks differ substantially. Alaska is a major airline, operates an all-jet fleet, and its average passenger trip length is 833 miles. Horizon is a regional airline, operates jet and turboprop aircraft, and its average passenger trip is 231 miles. ALK is a leader in the group and is forming a bullish three-week tight base-on-base pattern. ALK just broke out above a $70.96 buy point. As long as this level holds, the stock is in good shape.
JetBlue Airways (JBLU), a passenger carrier company, provides air transportation services. As of Dec. 31, 2014, the company operated a fleet of 13 Airbus A321 aircrafts, 130 Airbus A320 aircrafts and 60 Embraer 190 aircrafts. It also served 87 destinations in 27 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands and 17 countries in the Caribbean and Latin America. JetBlue Airways was founded in 1998 and is based in Long Island City, N.Y. The stock continues acting well as it sits just above its 50 DMA line.
Virgin America (VA) is a premium airline providing scheduled air travel in the continental United States and Mexico. The company's services feature mood-lit cabins with fleetwide Wi-Fi, custom-designed leather seats, power outlets and a video touchscreen at every seatback offering guests on-demand menus and multiple entertainment options. Virgin America is headquartered in Burlingame, Calif. The stock gapped up today after reporting its latest quarterly results, indicating strong institutional buying.
Ryanair Holdings (RYAAY), together with its subsidiaries, provides airline services in Ireland, the United Kingdom, continental Europe and Morocco. It also offers various ancillary and Internet-related services; and markets accommodation services and travel insurance through its website, as well as the in-flight sale of beverages, food and merchandise. In addition, the company sells bus and rail tickets onboard its flights and through its website. It also markets car parking, attractions, activities and gift vouchers through its website. As of June 30, 2014, it had a fleet of 297 Boeing 737-800 aircraft and five leased aircraft, and offered about 1,600 scheduled short-haul flights per day serving approximately 186 airports, primarily in Europe. The company was founded in 1985 and is headquartered in Swords, Ireland. Ryanair is the JetBlue of Europe and is forming a bullish four-week handle as it pulls into its 50 DMA line.
Allegiant Travel (ALGT), a leisure travel company, focuses on the provision of travel services and products to residents of underserved U.S. cities. The company offers scheduled air transportation on limited-frequency nonstop flights between underserved cities and leisure destinations. As of Feb. 2, 2015, it operated a fleet of 53 MD-80 aircraft, four Airbus A319 aircraft, nine Airbus 320 aircraft and six Boeing 757-200 aircraft providing services on 229 routes to 94 cities. The company also provides air-related services and products in conjunction with air transportation, including use of its call center for purchases, baggage fees, advance seat assignments, travel protection products, change fees, priority boarding, food and beverage purchases on board, and other air-related services. The company was founded in 1997 and is headquartered in Las Vegas, Nev. In the short term, the stock is clearly extended but continues to be a leader in this space.