Airlines Share Earnings Report Amid Flight Cancellations to China

NEW YORK, N.Y. – Airline shares are trading higher today even as carriers like Lion Air and United Airlines announced the cancellation of flights to China. Several major carriers have also shared their quarterly earnings report.

Stocks in several airline companies recovered as the day’s outlook turned out to be favorable. Delta Air Lines and American Airlines saw their shares advancing. The former gained 1.4% while the latter went up by 2.3%.

Chinese carriers also had a relatively good day. Shares in China Eastern Airlines and China Southern Airlines were both up by 1.5%.

Despite the hopeful news, a number of carriers have decided to either limit or suspend flights to China. United Airlines said it will suspend some of its flights to the Asian country starting on the first week of February. The massive drop in demand was reportedly the reason.

Meanwhile, Indonesia’s Lion Air Group recently said it will also suspend all flights to China beginning February. The company said it was because of their concerns regarding the new coronavirus.

In a statement, the Indonesian carrier claimed it has already cancelled six flight routes. But all routes will be suspended next month.

The coronavirus outbreak has already claimed 130 lives in China, with 1,500 new cases revealed on Tuesday.

The dire news about the Wuhan virus and the limited flights to China didn’t deter airline giants American Airlines, JetBlue Airways, and Southwest Airlines from reporting their 2019 fourth-quarter earnings.

The earnings reports showed that JetBlue shares gained the most value. The low-cost carrier’s earnings exceeded the Zack’s Consensus Estimate while also increasing YoY due to low fuel prices. The company came in at 56 cents a share, with quarterly earnings rising 12%. Operating profits reached $2,031 million while passenger revenues were up 3%.

American Airlines claimed an in-line earnings of $1.15 a share, reflecting the Zacks Consensus Estimate The company’s bottom line increased 10.6% YoY based on lower fuel prices. Its operating profit went up 3.4% to hit $11,313 million. Higher passenger revenues reportedly pushed the top line.

Meanwhile, Southwest Airlines’ earnings report was a little dull when compared to its two counterparts. The Dallas-based airline missed its earnings assessment and showed a 16.2% YoY decline. Its fourth quarter operating profit was at $665 million. It was a steep drop from last year’s $820 million.

The groundings of Boeing 737 MAX planes were undoubtedly a major, and expensive, factor. It affected Southwest’s operating income by $313 million.