Airline Stock Roundup: LUV Ends Free Baggage Policy, UAL, DAL in Focus

Southwest Airlines LUV has begun charging for checked bags as of May 28. LUV was the only major U.S. airline that allowed customers to check in two bags at no cost. JetBlue Airways JBLU and United Airlines UAL inked a partnership to expand customer benefits, loyalty rewards, and travel options across the networks of both carriers. United Airlines was also in the news when it inked a tentative pay-related labor deal with its multiple flight attendants. An expansion-related update from Delta Air Lines DAL was also available in the past week.

Read the last Airline Stock Roundup here.

Recap of the Most Recent Important Stories

1.  Southwest Airlines’ decades-long "two bags fly free" era has come to an end. The carrier began charging certain customers $35 for their first checked bag and $45 for their second on flights booked on or after May 28. LUV’s new bag fees apply to its Basic, Wanna Get Away Plus, and Anytime fares. Rapid Rewards A-List Preferred Members and customers traveling on Business Select or Choice Extra fares will still be able to have two free checked bags. Standard A-List Members and Rapid Rewards Credit Card Members will get one free bag. Lackluster results lately have increased pressure on LUV to revamp its business as it strives to raise its operating margin to at least 10% in 2027 from 2% in 2024.

2. United Airlines inked a provisional agreement with its flight attendants’ union, Association of Flight Attendants-CWA. The union covers about 28,000 attendants at the Chicago-based carrier. The final contract language will be finalized shortly. The agreement, if approved by the union’s Master Executive Council, will be put forward for ratification by flight attendants. The deal will materialize only if the ratification outcome is favorable. The deal, on becoming effective, will make flight attendants eligible for significant gains in compensation apart from ensuring a better work-life balance.

UAL currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

3. In a customer-friendly move, JetBlue and United Airlines launched a loyalty-focused partnership. The initiative called “Blue Sky” enables passengers to earn and redeem loyalty points across both carriers, with shared access to preferred seating, standby options and simplified booking through each carrier’s website and app. Specifically, UAL will move its website and mobile app’s ability to sell hotels, rental cars, cruises, and travel insurance, on both a stand-alone and package basis, to the new technology and services offered by JetBlue’s Paisly platform.

4.  In line with the efforts to strengthen its footprint in Spain, Delta launched a new nonstop flight from Boston to Barcelona. Flights on the new route will operate thrice a week. This route complements Delta’s existing services to Barcelona from New York-JFK (12 weekly flights) and Atlanta (10 weekly flights). Flights on the Boston–Barcelona route are being operated by DAL through a 281-seater Airbus A330-900neo, equipped with all modern facilities.
 

Airline Stocks Performance

The following table shows the price movement of the major airline players over the past week and during the last six months.

The NYSE ARCA Airline Index increased by 5.3% to $57.63, with all airline stocks traded in the green over the past week. Over the past six months, the NYSE ARCA Airline Index has decreased by 10.6%.

What’s Next in the Airline Space?

Updates on declining fuel costs, a key input for airlines, will also be eagerly awaited. Some traffic reports for the month of May will also be awaited by investors in the coming days.
 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research