US labor costs rose in the third quarter at the slowest pace in four years on an annual basis, adding to evidence that a softening job market is helping limit inflationary pressures https://t.co/JggTkizKFo ...

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]

Beef Market Trends & Costs - Beef prices continue to be high, impacting Labor Day weekend barbecues [1] - Some beef prices, especially prime beef from Nebraska, have fallen by approximately 15% since January [5] - Holiday seasons are expected to cause beef prices to rise again [6] Restaurant Business & Cost Management - Restaurants are sharing larger cuts of meat among multiple guests to manage costs, such as a Nebraska beef chop (kabuff) shared by two or three people [3] - Labor costs, especially in locations like LAX, are increasing significantly, with dishwashers potentially earning a minimum wage of $30, leading to cooks needing to be paid $40 [11] - Insurance costs in California are rising due to fires, making it difficult to obtain insurance [10] Consumer Behavior & Quality - The top-end consumer market remains relatively stable, but the middle market faces more challenges [7] - Consumers are prioritizing quality over quantity, potentially eating steak less frequently but opting for better quality [8] - Restaurants are focusing on providing great experiences and high-quality steaks to retain customers [8] Menu & Sourcing Strategies - Restaurants are using Snake River Farm beef (a cross between Wagyu and Black Angus) as a more reasonable alternative to expensive Australian Wagyu beef [3] - Dry-aged rib chops are being sliced and shared among families, served with simple sides like French fries and vegetables [14] - High-quality meat requires minimal seasoning, such as salt and pepper [4][5]

The China-plus-one strategy—which led firms to build production hubs outside China—is not just a way to dodge tariffs. It is also a way to avoid rising labour costs, political crackdowns and American export controls https://t.co/g7TgJcZQpt ...

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]

Economic Indicators - The European Central Bank (ECB) lowered interest rates by 25 basis points, with the Deposit Facility now at +2.50%, signaling confidence in controlling inflation despite trade war concerns [2] - Initial Jobless Claims for last week were reported at +221K, lower than the anticipated +235K, indicating stability in the labor market [4] - Continuing Claims rose to 1.897 million, approaching the psychological level of +1.9 million, which may raise concerns about the robustness of the U.S. labor market [5] - Q4 Productivity was revised up to +1.5%, marking the ninth consecutive upward move, while Unit Labor Costs were revised down to +2.2%, indicating improved productivity and lower costs [6] - The U.S. Trade Deficit reached a record -$131.4 billion, significantly higher than the previous month's -$98.4 billion, influenced by anticipated trade tariff changes [7] Company Earnings - Earnings reports from Macy's, Burlington Stores, and Cracker Barrel exceeded expectations, while upcoming reports from Broadcom and Costco are anticipated [8]