Good evening. I'm Hi Jackson in for Tom tonight. And we begin with that intense search and rescue mission happening right now in Iran with the US military rushing to find an American airman missing after the F-15 fighter jet they were in appears to have been shot down.And now Iran has put a bounty on that service member's head. On the ground in Iran, this video appears to show Iranians, you see it there, shooting at a US helicopter as it flies overhead. Apparently, as part of the rescue effort, one airman h ...

Core Insights - Carnival Corp has reduced its annual profit forecast due to increased fuel costs impacting the cruise operator's margins amid escalating geopolitical tensions [1] Company Summary - The company is facing pressure on its profit margins primarily from rising fuel costs [1] - The geopolitical tensions are contributing to the uncertainty in the cruise industry, further affecting financial performance [1] Industry Summary - The cruise industry is experiencing challenges related to cost pressures and geopolitical factors, which may influence overall profitability and operational strategies [1]

Core Viewpoint - Carnival Corp is set to report its first quarter earnings on March 27, with significant attention on fuel costs, near-term demand, and regional pricing trends, marking it as the first unhedged, commodity-exposed travel company to report in the current environment [1] Group 1: Earnings Forecasts - Bank of America has lowered its 2026 EPS and EBITDA forecasts for Carnival, estimating a $650 million reduction in EBITDA and a $0.47 decline in EPS due to rising fuel prices [2] - For the upcoming quarter, Bank of America forecasts Carnival's EBITDA slightly above guidance at $1.26 billion, with EPS of $0.17, aligning with consensus expectations [5] Group 2: Fuel Cost Impact - Carnival's exposure to fuel volatility is higher than some peers, with a 10% move in fuel prices potentially impacting Q1 2026 net income by $37 million and 2026 results by $145 million [3] - Analysts encourage investors to look beyond the current fuel spike to 2027 forecasts, which may reflect more normalized prices [2] Group 3: Regional Trends and Onboard Spending - Carnival's Caribbean mix is expected to peak at 51% in Q1 2026 before averaging 30% for the remainder of the year, with Europe and Alaska accounting for 36% and 17% of later-quarter capacity, respectively [4] - Recent weakness observed at other cruise operators may be specific to those companies, suggesting that Carnival's performance could differ [4] Group 4: Cost Projections - Constant-currency net yields are projected to rise by 1.9%, while net cruise costs are expected to increase by 5.2%, slightly below guidance [5]

Core Insights - Delta Air Lines raised its revenue guidance due to strong demand from both leisure and corporate travelers, with Maintenance, Repair, and Overhaul (MRO) revenue exceeding earlier projections [1][4] - Despite recent pressures on airline stocks from rising oil prices and geopolitical tensions, analysts maintain a positive outlook for many carriers, suggesting strong demand could mitigate rising fuel costs [2][6] Group 1: Airline Performance and Guidance - Delta expects first-quarter revenue to rise in the high single digits, up from a previous forecast of 5% to 7% growth, with eight of the ten best sales days in its history occurring in the last quarter [7][8] - American Airlines anticipates a more than 10% increase in first-quarter total revenue, marking its highest year-over-year quarterly revenue growth, despite expecting jet fuel prices to average about $2.75 per gallon [12] - Allegiant Travel expects record first-quarter revenue despite a 5.5% decline in system capacity, raising its adjusted earnings guidance to $3.25 to $3.75 per share [14][15] - JetBlue raised its operating revenue outlook per available seat mile to a range of 5% to 7%, up from prior guidance of flat to 4%, while also adjusting its jet fuel cost expectations to between $3.01 and $3.06 per gallon [17][18] Group 2: Market Sentiment and Analyst Ratings - Analysts remain bullish on Delta stock, with 22 Buy ratings and an average 12-month price target of just under $79, implying over 20% upside from its current price of about $64.50 [9][10] - American Airlines has a consensus rating of Hold, with an average 12-month price target of around $15.50, suggesting over 40% upside from its current price near $11 [13] - Allegiant's stock has mixed ratings, with an average 12-month price target of around $99, indicating more than 25% upside despite a recent 24% decline [16] - JetBlue's consensus rating is Reduce, with an average 12-month price target of just under $5, implying roughly 25% upside despite a 29% drop over the past month [18]

Core Viewpoint - Airline stocks have experienced a decline due to concerns over rising fuel costs triggered by the ongoing conflict in Iran [1] Group 1: Industry Impact - The conflict in Iran has raised fears about potential increases in fuel prices, which could significantly impact airline operating costs [1] - Airlines are particularly sensitive to fuel price fluctuations, as fuel costs represent a substantial portion of their overall expenses [1] Group 2: Market Reaction - Following the news of the conflict, airline stocks have seen a notable drop, reflecting investor anxiety regarding future profitability [1] - The market's reaction indicates a broader concern about the stability of the airline industry amidst geopolitical tensions [1]

Core Insights - Alaska Air Group, Inc. (ALK) has issued disappointing third-quarter 2025 earnings guidance due to higher fuel expenses and operational challenges [1][2] - The adjusted earnings per share (EPS) for Q3 2025 is projected to be at the low end of the previous range of $1.00-$1.40, with the Zacks Consensus Estimate currently at $1.35 [2][4] - The company is facing increased fuel cost expectations, now projected at $2.50–$2.55 per gallon, up from nearly $2.45 [3][7] Financial Performance - ALK's Q3 2025 adjusted EPS is negatively impacted by higher fuel costs and operational issues, including a July IT outage and weather-related disruptions [4][19] - The Zacks Consensus Estimate for Q3 2025 earnings has been revised downward by 26.2% over the past 60 days [4][5] - Despite the challenges, ALK has solid revenue trends, with unit revenues expected to be near the high end of prior guidance [20] Industry Context - Other airlines, such as Delta Air Lines (DAL) and JetBlue Airways Corporation (JBLU), have also updated their Q3 2025 guidance, with DAL projecting revenue growth of 2-4% and JBLU expecting a slight increase in available seat miles [8][10] - ALK's stock has shown strong performance over the past three months, outperforming the Zacks Airline industry and its peers [12] - From a valuation perspective, ALK is trading at a discount compared to the industry, with a forward 12-month price-to-sales ratio of 0.45X versus 0.56X for the industry [15][16] Investment Outlook - The current earnings expectations for ALK are weighed down by operational issues and higher fuel costs, suggesting it may not be an opportune time to buy [19] - The stock's attractive valuation and solid revenue trends indicate potential for future growth, but investors are advised to wait for a better entry point [20][21]

Industry Overview - The Zacks Transportation - Airline industry is experiencing improved prospects due to stabilizing air-travel demand and declining fuel costs, which are significant input costs for airlines [1][4] - The industry includes both legacy carriers and low-cost airlines, with operations supported by regional subsidiaries and third-party carriers [3] Air Travel Demand - Air travel demand has stabilized, with Delta Air Lines projecting a revenue growth of 2-4% for Q3 2025 compared to Q3 2024, indicating stronger-than-expected demand and capacity discipline [4] Financial Returns - Airlines are increasingly allocating cash for dividends and buybacks, reflecting financial strength and confidence in business recovery post-pandemic [5] - Delta Air Lines approved a 25% increase in its quarterly dividend, raising it to $0.75 annualized, to be paid on August 21, 2025 [6][7] Fuel Costs - The average jet fuel cost is expected to decrease to $86 per barrel in 2025 from $99 per barrel in 2024, contributing to a lower total fuel bill of $236 billion in 2025 compared to $261 billion in 2024 [8] Labor Costs - Airlines are facing increased labor costs due to labor shortages and heightened bargaining power of labor groups, which may limit bottom-line growth [10] Industry Ranking - The Zacks Airline industry holds a Zacks Industry Rank of 55, placing it in the top 22% of 245 Zacks industries, indicating bright near-term prospects [12][13] Stock Performance - Over the past year, the Zacks Transportation - Airline industry has gained 41.9%, outperforming the S&P 500's rise of 18.8% and the broader sector's decline of 10.9% [14] Valuation - The industry has a forward 12-month price-to-sales (P/S) ratio of 0.67X, significantly lower than the S&P 500's 5.37X and the sector's 1.46X [16] Stocks to Monitor - Delta Air Lines (DAL), Ryanair Holdings (RYAAY), and SkyWest (SKYW) are highlighted as stocks to monitor for potential higher returns, with RYAAY showing a strong earnings surprise history [2][19][20][23][27]

Group 1: Delta Air Lines Performance - Delta Air Lines reported better-than-expected earnings per share and revenues in Q2 2025, although the bottom line declined significantly year over year due to high labor costs [1][10] - Labor costs increased by 10% to $4.4 billion in Q2 2025, following an 8% rise in Q1 2025, resulting in a 9% year-over-year increase in the first half of 2025 [2][10] - Non-fuel unit costs rose by 2.7% in the first half of 2025, primarily due to the increase in salaries and related costs [2] Group 2: Fuel Costs and Market Conditions - Delta Air Lines experienced a 13% decline in aircraft fuel expenses and related taxes in Q2 2025, with the average fuel price per gallon decreasing by 14% year over year to $2.26 [3][10] - Oil prices fell by 6% during the April-June period, benefiting Delta's bottom line as fuel expenses are a key input cost for airlines [4] - The International Air Transport Association projects the average jet fuel cost to be $86 per barrel in 2025, down from $99 in 2024, with the total fuel bill expected to decrease from $261 billion in 2024 to $236 billion in 2025 [5] Group 3: Future Outlook - Delta's CFO anticipates that the September quarter will show the best non-fuel unit cost performance of the year, with non-fuel unit costs expected to be flat to down compared to 2024 [5] - The easing of hostilities between Israel and Iran has contributed to the decline in oil prices, which may further support Delta's financial performance in Q3 2025 [5]

Industry Overview - The Zacks Airline industry is involved in transporting passengers and cargo globally, with operators maintaining a fleet of mainline jets and regional planes [3] - The industry includes both legacy carriers and low-cost airlines, and its performance is closely tied to the overall economy [3] - Air travel demand has improved significantly from pandemic lows, indicating a recovery trend [3] Current Market Conditions - The gradual de-escalation of the Israel-Iran conflict has led to a decline in oil prices, positively impacting airline fuel costs [1][9] - The average jet fuel cost is projected to decrease to $86 per barrel in 2025 from $99 per barrel in 2024, contributing to a lower total fuel bill of $236 billion in 2025 compared to $261 billion in 2024 [8] - Despite low fuel costs, airlines are facing increased labor costs due to a post-COVID-19 labor shortage, which is affecting their bottom-line growth [10] Financial Performance and Projections - The International Air Transport Association (IATA) forecasts total airline revenues to reach $979 billion in 2025, with passenger revenues expected to hit $693 billion, marking a 1.6% increase from 2024 [4] - A record 4.99 billion passengers are anticipated to travel globally in 2025, representing a 4% increase from 2024 [4] - The Zacks Airline industry has outperformed the S&P 500, returning 22.7% over the past year compared to the S&P 500's 9.6% rise [14] Shareholder Returns - Airlines are increasingly returning cash to shareholders through dividends and buybacks, reflecting financial strength and confidence [5] - Delta Air Lines has approved a 25% dividend hike, raising its quarterly cash dividend to $0.75 from $0.60, to be paid on August 21, 2025 [6][7] Investment Opportunities - LATAM Airlines is experiencing strong air travel demand, with a 3.6% increase in passengers in Q1 2025 compared to the same period in 2024, and a 28.8% upward revision in earnings estimates [22] - Copa Holdings is benefiting from regional economic expansion and has consistently beaten earnings estimates, with upward revisions of 6.3% and 4.5% for current and next-year earnings, respectively [26][27] - SkyWest has gained 7.5% over the past three months, with a 3.5% upward revision in earnings estimates for 2025 [31]