What Does Wall Street Think Of Airline Earnings So Far?

Earnings season for airlines is in full swing, and Wall Street has had a lot to say about the latest numbers. Here’s a look at some recent commentary from two top firms.

Deutsche Bank
Analyst Michael Linenberg likes what he sees from Southwest Airlines Co LUV, United Continental Holdings Inc UAL and Alaska Air Group, Inc. ALK. In new reports out this week, Linenberg praised Southwest for its record-high return on invested capital (ROIC) of 32.7 percent on 2015 and highlighted United’s record full-year results and aggressive non-fuel cost savings initiative.

“Alaska, in our estimation, is on track to produce another year of solid EPS growth (~10%) as the airline benefits from the launch of Premium Class seating, an enhanced credit card agreement, moderating capacity growth, lower fuel prices, and reduced share count,” Linenberg added.

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Deutsche Bank maintained its Buy rating on Southwest and United and upgraded Alaska from Hold to Buy.

Credit Suisse
Analyst Julie Yates liked United’s massive $750 millio-plus Q1 buybacks commitment and was surprised that Southwest’s stock didn’t see a better market reaction given its better-than expected RASM guidance for 2016.

However, Yates was not impressed by Alaska’s numbers. “We expect PRASM underperformance to persist in HI’16 and think that Q1’16 PRASM will worsen vs. Q4’s (6.5%),” she explained.

Credit Suisse maintained Outperform ratings on Southwest and United and a Neutral rating on Alaska.

Disclosure: the author holds no position in the stocks mentioned.