4 Airline Stocks To Ride On Bullish Q4 Unit Revenue Views

Stocks in the airline space are flying high lately on the back of improved unit revenue projections provided by the key sector players like JetBlue Airways (JBLU - Free Report) , American Airlines Group (AAL - Free Report) and United Continental Holdings (UAL - Free Report) .

The bullish projections bode well for the sector with a deluge of fourth-quarter earnings reports, scheduled to be released in the next few days/weeks. We note that Delta Air Lines had started the fourth-quarter earnings season on a favorable note. The carrier reported better-than-expected earnings per share and revenues. This Zacks Rank #3 (Hold) company also performed well on the unit revenue front. 

Impressive Price Performance

Post hurricanes, the airline stocks are back in favor. This is highlighted by the fact that the Zacks Airline Industry has outperformed the S&P 500 Index in the last three months. While the S&P 500 index gained 9.1%, the industry rallied 10.7%.

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Bullish Q4 Unit Revenue Views Bode Well

As we head into the busy part of the earnings season, the impressive fourth-quarter projections for unit revenues, measure of  sales relative to capacity for a carrier, boost the overall sentiment around the airlines stocks.

For example, American Airlines now expects total revenue per available seat mile (TRASM) for the fourth quarter to rise in the range of 5-6% year over year. Previous view was an increase in the band of 2.5-4.5%. The improved outlook comes on the back of higher yields across all the geographical regions and better-than-expected domestic close-in bookings.

Additionally, the company anticipates pre-tax margin between 6.5% and 7% for the to-be-reported quarter. Earlier forecast was in the range of 4.5-6.5%. JetBlue Airways expects TRASM to increase approximately 1.8%. Previous view had hinted the metric in the band of -0.5% to +1.5%.

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