Despite the growing number of flight disruptions before the July Fourth weekend, airline investors have shown minimal concern.
FlightAware, a flight-tracking site, reported that during the period from June 24 to July 2, over 63,000 flights (30% of schedules) operated by U.S. airlines experienced delays, and more than 9,000 flights (4.2%) were canceled. These figures exceed the disruption averages observed earlier this year.
On Tuesday, the number of flight disruptions decreased, with approximately 2,500 U.S. flights experiencing delays. This is half the number of delays compared to Monday. However, thunderstorms persisted, causing disruptions at major airports such as Newark and Denver.
The recent flight delays were primarily caused by a succession of storms and other factors, including a shortage of air traffic controllers in busy airspace around New York and other regions. These disruptions affected the travel plans of thousands of passengers and disrupted what had been a relatively smooth spring season for travelers.
Despite the challenges faced by the airline industry, high travel demand has been a driving force behind the positive performance of airline stocks, with many reaching multi-year highs.
The Transportation Security Administration announced that Sunday witnessed a groundbreaking milestone as it screened approximately 2.9 million individuals in a single day. This remarkable feat serves as a strong indicator of the unwavering desire for air travel, as passengers eagerly book flights, redeem rewards points, and compensate for the time lost during the Covid pandemic, when travel was put on hold.
Thanks to robust bookings, American Airlines and Delta Air Lines have recently revised their profit forecasts upwards. The industry is also benefiting from lower fuel prices compared to the previous year, which continues to provide a favorable boost.
Airlines are set to unveil their second-quarter results and provide a comprehensive outlook for the entire summer, beginning in mid-July. These reports are expected to encompass the financial implications of the recent disruptions experienced in late June and early July.
The stocks of major U.S. airlines have experienced a notable rise this year, surpassing the overall market’s performance by a significant margin.
As of Monday, United Airlines and Delta have seen their stock prices surge by 46% this year, while American Airlines has experienced a 42% increase. In comparison, the S&P 500 has recorded a gain of 16% during the same period. Both Delta and United have recently reached their highest stock levels since June 2021.
Despite facing a first-quarter loss due to a significant operational setback at the end of 2022, Southwest Airlines has managed to achieve a 10% increase in its stock value this year.
Source : cnbc.com
