In the past week, Alaska Air Group ALK provided rosy projections for the fourth quarter of 2024. Buoyant holiday travel demand led to the healthy guidance. Lower capacity has also been boosting profitability. Driven by upbeat air travel demand, Copa Holdings CPA reported a year-over-year uptick in traffic for November.

In a bid to return to profitability, JetBlue Airways JBLU has decided to add first-class seats to domestic planes that aren't already equipped with Mint seats. The change will take effect from the beginning of 2026. More than 5 billion passengers are likely to travel by air globally for the first time in 2025, per a forecast by the International Air Transport Association or IATA.

Recap of the Recent Most Important Stories

1.  Alaska Air now expects to report fourth-quarter adjusted per share earnings in the range of 40-50 cents, up from the previous guidance of 20 cents to 40 cents. Revenue per available seat miles is now expected to rise in the mid-to-high single digits, compared with prior guidance of up by mid-single digits. In a shareholder-friendly move, ALK's board approved a share buyback program of up to $1 billion. ALK also outlined a three-year plan (Alaska Accelerate) to deliver $1 billion in profit following the closure of the merger with Hawaiian Airlines earlier this year. The plan is expected to result in short and long-term value creation and drive double-digit margins in the range of 11-13%, apart from boosting EPS to at least $10 by 2027. ALK expects synergies from the acquisition to double to at least $500 million by 2027.

2. Riding on the buoyant air travel demand scenario, total traffic (measured by revenue passenger miles) at Copa Holdings increased 6.8% year over year in November. Capacity (measured by available seat miles) increased by 8.4%, highlighting the rosy scenario with respect to operational expansion. CPA's November load factor (percentage of seats filled with passengers) was a solid 86.1%, reflecting operational efficiency in managing increased capacity while sustaining passenger loads.

Copa Holdings currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. Owing to the buoyant air travel demand scenario, IATA expects the airline industry to generate a net profit of $36.6 billion (net profit margin of 3.6%) in 2025 compared with $31.5 billion estimated for 2024. Operating profit in 2025 is expected to be $67.5 billion for a net operating margin of 6.7% ( 6.4% is expected in 2024). The top line in 2025 is now anticipated to be $1.007 trillion (crossing the $1 trillion mark for the first time). The revenue projection reflects a 4.4% increase from the 2024 expectation. Passenger revenues are the biggest driver of the rosy projection for 2025. Per IATA, passenger revenues in 2025 are anticipated to be $705 billion, which is 70% of total revenues.

4. From 2026, all JetBlue’s Airbus jets without Mint, the airline’s lie-flat seats, will have two or three rows of domestic first-class seats (junior mint). The seats will be in a two-by-two configuration. The move is aimed at attracting high-paying customers by providing extra comfort.

JetBlue was also in the news recently when it provided an improved projection for key metrics for fourth-quarter 2024. The news was covered in detail in the previous week’s write-up.

Performance

The following table shows the price movement of the major airline players over the past week and during the last six months.

Image Source: Zacks Investment Research

The NYSE ARCA Airline Index increased 5.8% to $69.29, as most stocks in the table above traded in the green. Over the past six months, the NYSE ARCA Airline Index has increased by 19%.

What’s Next in the Airline Space?

With the earnings season over, we expect updates from many carriers regarding their plans to meet the anticipated demand swell during the winter travel season.

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