Both AAL and UAL reported better-than-expected quarterly earnings and revenue
Two major airlines have stepped into the earnings confessional this morning to report fourth-quarter earnings. American Airlines Group Inc (NASDAQ:AAL) is down 2.7% at $16.85 at last check, after posting narrower-than-expected quarterly losses, as well as a revenue win. Meanwhile, United Airlines Holdings Inc (NASDAQ:UAL) was last seen down 1.3% at $43.83, despite beating analysts' earnings and revenue estimates, though UAL warned of higher costs and lowered its capacity forecast.
It is no secret airline stocks have had a volatile run on the charts lately. The 120-day moving average has been pressuring American Airlines stock lower over the past couple of months, while the $20 level rejected the security's most recent rally. AAL still sports an 8.5% year-over-year lead, though.
While bears are still firmly in control, shorts have started to hit the exits. Short interest is down 8.3% in the most recent reporting period, and the 94.01 million shares sold short make up 14.7% of the stock's available float, or nearly three days' worth of pent-up buying power.
Volatility has also plagued United Airlines stock, though a familiar floor at the $43 level looks ready to contain today's pullback. Shares are cooling from a rally to the $49 area, after bouncing off the $39 mark twice in December. Over the last nine months, UAL has shed 14.7%.
Analysts are split towards the equity, with seven carrying a tepid "hold" or worse, while the remaining six say "buy" or better. Meanwhile, the 12-month consensus target price of $58.83 is a whopping 35.4% premium to current levels, suggesting price-target cuts could be on the horizon.
Both equities are getting blasted in the options pits today, with 46,000 calls across the tape for AAL, which is triple the intraday average, and the January 18 call standing as the most popular. UAL has seen 24,000 calls and 10,000 puts across the tape so far, which is double what's typically seen at this point. The most popular contract for the latter is the January 45 call.