Travelers are seen ahead of the Fourth of July holiday weekend at Hartsfield-Jackson Atlanta International Airport on June 30, 2023 in Atlanta, Georgia.
Elijah Nouvelage | AFP | Getty Images
Flight disruptions piled up at airports across the country ahead of the Fourth of July weekend, but airline investors largely ignored them.
Greater than 63,000 flights operated by US airlines, or 30% of their schedules, were delayed between June 24 and July 2. Greater than 9,000, or 4.2%, were cancelled. In accordance with FlightAware, which tracks flights, each of these percentages are above average disruptions this yr.
The delays were mainly attributable to a series of thunderstorms coupled with other issues reminiscent of a shortage of air traffic controllers in the congested airspace around Recent York City and elsewhere, which thwarted travel plans for hundreds of customers. It turned what had been a mostly quiet spring for travelers the wrong way up.
Nevertheless skyrocketing demand for travel continues to maintain airline stock prices high, with a couple of reaching multi-year highs.
The Transportation Security Administration said it screened nearly 2.9 million people on Sunday, a record for sooner or later. That is the clearest sign yet of unabated demand for air travel as passengers book flights or earn loyalty points and make up for lost time after travel has been halted by the Covid pandemic.
american airlines AND Delta Airlines recently raised their profit forecasts due to strong bookings. Lower fuel prices in comparison with last yr are also wind in the sails for the industry.
The airline is releasing second-quarter results and can provide an outlook for the entire summer starting in mid-July, reports more likely to include the financial impact of late June and early July disruptions.
Airline stocks are on the rise
Major U.S. carrier stocks have surged significantly ahead of the broader market this yr.
United Airlines and Delta posted 46% growth this yr through Monday, while American Airlines was up 42%. For comparison, the above S&P 500 increased by 16% over the same period. Delta and United recently hit their highest levels since June 2021.
Southwest Airlineswhose crash at the end of 2022 led to a loss in the first quarter, has grown by 10% this yr.
The NYSE Arca Airline Index, which tracks mainly US airlines, was up 51% year-to-date through Monday, outperforming the S&P 500 index by 16%.
Even in the last week, when operations were in turmoil with travel, many airlines were at the top of the S&P 500, with the exception of United Airlines. Its shares fell 1.7% as the airline struggled to stabilize its operations as storms swept through its hub at Newark Liberty International Airport.
In accordance with FlightAware, from June 24 to July 2, United had the largest share of US carrier delays, accounting for 42% of the fundamental flight schedule.
The Federal Aviation Administration lowered the number of departures at Newark early last week, resulting in piling up delays, CEO Scott Kirby said. When planes cannot depart, arriving planes don’t have any place to park, so disruption can easily escalate.
“Airlines, including United, are simply not designed to have their largest hub severely restricted for 4 days in a row and still operate successfully,” Kirby said in a staff memo this weekend.
He said the airline would should shorten its flight schedule in Newark, especially during the spring and summer months, to avoid traffic jams unless there was more capability at the airport.
Storms are difficult for airlines because they’ll come suddenly and are tougher to predict than other types of weather, reminiscent of hurricanes or winter storms.
Airlines often delay flights to attend for storms to clear and airspace to open, moderately than canceling flights, but crews can hit federal workday limits, increasing disruption.
David Neeleman, founder and former CEO of the company JetBlue Airways and the CEO of Breeze Airways said there’s little airlines can do amid such sharp cuts to airline arrival rates.
He said airlines could proactively cancel flights only for the weather to enhance.