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Winter Storms and Guidance Are Wreaking Havoc on Airline Stocks

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Winter Storms and Guidance Are Wreaking Havoc on Airline Stocks PART 1 OF 13

Winter Storm Stella Caused Airline Stocks to Slump

Flight cancellations

The US East Coast was recently hit by Winter Storm Stella, grounding thousands of people and causing flight cancellations and a state of emergency in Maryland and Virginia. According to FlightAware, almost 7,500 flights were canceled on March 14, 2017.

Winter Storm Stella Caused Airline Stocks to Slump

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Southwest Airlines (LUV) reported the highest number of cancellations, with 976 (or 23%) flights canceled on March 14. Southwest Airlines was followed by American Airlines (AAL), which canceled 713 (or 23%) flights.

JetBlue Airways (JBLU) canceled 653 (or 64%) flights, United Continental (UAL) canceled 570 (or 27%) flights, Delta Air Lines (DAL) canceled 361 (or 11%) flights, and Spirit Airlines (SAVE) canceled 115 (or 24%) flights.

Airline stocks battered

Flight cancellations mean lost revenues for the month, which impacted airline stocks. On March 14, United Continental saw the highest loss of 4.8%. Spirit Airlines lost 3.4%, Southwest Airlines lost 3%, and American Airlines lost 2.7%. Delta Air Lines lost 2.3%, Alaska Air Group (ALK) lost 2.2%, and JetBlue Airways lost 2.1%.

Year-to-date (or YTD) through March 16, 2017, Southwest Airlines and Alaska Air Group have significantly outperformed their peers, rising 8.7% and 6.1%, respectively.

However, the rest of the airlines have lost value. Spirit Airlines posted the highest loss of 11.7% during the same period, and JetBlue lost 10.7%. American Airlines lost 9.8%, United Continental lost 7.3%, and Delta Air Lines lost 3.6% YTD through March 16. A major catalyst for Southwest Airlines was the increased investment by long-time airline bear Warren Buffett.

The broader market, tracked by the SPDR S&P 500 ETF (SPY), rose ~6.7% YTD through March 16. Next, we’ll see how economic growth impacts airline companies.

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