Zacks Industry Outlook Highlights: Delta Air Lines, Boeing, Embraer, United
Continental Holdings and Ryanair Holdings
CHICAGO, Aug. 8, 2013
CHICAGO, Aug. 8, 2013 /PRNewswire/ --Today, Zacks Equity Research discusses
the U.S. Airlines, including Delta Air Lines (NYSE:DAL-Free Report), The
Boeing Company (NYSE:BA-Free Report), Embraer SA (NYSE:ERJ-Free Report),
United Continental Holdings Inc. (NYSE:UAL-Free Report) and Ryanair Holdings
plc (Nasdaq:RYAAY-Free Report).
If pricing remains stable despite an uncertain macroeconomic outlook, the
carriers will likely experience better profitability. The Association projects
fuel cost of $214 billion in 2013, accounting for 31% of the overall operating
Most of the air carriers at large are scrapping flights in many small and
unprofitable airports in order to reduce their cost burden that has increased
55% over the period 2006–2013. The companies are also replacing old and
depleted airplanes with new and upgraded ones. Though initially expensive, new
and improved aircraft are more fuel efficient than the existing ones and will
help in lowering operating and maintenance costs.
Leading passenger carrier Delta Air Lines (NYSE:DAL-Free Report) disclosed
plans to shrink operations at the Memphis, TN hub due to low financial gains.
This initiative falls under Delta's strategy to trim its operating expenses
and achieve the targeted $1 billion in cost savings over the next few years.
Over the next 20 years, global airlines are expected to invest nearly $4
trillion to $5 trillion for fleet development. For this, the airlines are
banking on top aircraft manufacturers such as
The Boeing Company
) and Airbus.
Over the long run, the carriers aim to replace their old narrow-body jets --
A320's/B757-200/300 -- with advanced narrow-body airplanes such as A320 Neo
and the B737 Max, for better service and demand-supply equilibrium.
United Continental Holdings Inc.
) agreed to buy 30 Embraer 175 regional jets. The deal, estimated at about $4
billion, also has the option of 40 additional purchases. Additionally, the
airline placed a purchase order for 35 jets with Airbus for an undisclosed
amount. Per the agreement, Airbus will convert United's existing order of 25
A350-900s into A350-1000s as well as deliver 10 new A350-1000s starting 2018.
Ryanair Holdings plc (Nasdaq:RYAAY-Free Report) inked a deal with Boeing to
buy 175 new Next Generation 737-800 airplanes for approximately $15.6 billion.
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