Airline stocks and sector-related ETF will have a big day ahead of them as three major airline companies are slated to report quarterly earnings results Thursday.
Southwest Airlines (NYSE: LUV), Alaska Air Group (NYSE: ALK) and American Airlines Group (NYSE: AAL) will reveal quarterly results Thursday. Investors will be closely watching for signs that U.S. carriers are recovering after the quick rebound in fuel prices over late 2018, which may have pressured airliners’ quarterly profits, the Wall Street Journal reports.
Airline stocks have underperformed the S&P 500 for most of last year, following the broader index of transportation stocks, including truckers, railroads, couriers and shipping services lower.
The rising fuel costs crimped airline profits last summer. Furthermore, when prices slipped toward the end of the year, investors continued to exit the sector, pointing to concerns over adding too many new flights to help offset costs. There are even some whom are worried about the extended government shutdown and its effects on business travel, largely due to government employees and contractors not traveling while Congress and the White House are stuck at an impasse.
Nevertheless, some bargain hunters argue that airlines set to report results will face a lower bar to clear to positively surprise the markets. For example, United Continental Holdings (NasdaqGS: UAL) strengthened last week after revealing stronger-than-expected revenue and profit for the fourth quarter.
Investors can look to the U.S. Global Jets ETF (NYSEArca: JETS), the lone ETF dedicated to airline stocks, to access the growth in the airline sector. JETS follows the U.S. Global Jets Index, which uses fundamental screens to select airline companies, with an emphasis on domestic carriers, along with global aircraft manufacturers and airport companies.
The ETF’s top holdings include LUV 12.0%, AAL 11.7%, UAL 11.5% and ALK 4.2%.
For more information on the airline ETF, visit our Airline category.