Why Airline Stocks Lost Altitude This Week
Fears are growing that the U.S. economy is flying toward a recession, and airline stocks are losing ground, as a result. Shares of Delta Air Lines (NYSE: DAL), United Airlines Holdings, American Airlines Group, Southwest Airlines (NYSE: LUV), Alaska Air Group, JetBlue Airways, and Hawaiian Holdings were all down 12% or more for the week, as of close of business Thursday afternoon.
For airline investors, 2022 is not living up to the high expectations Wall Street had heading into the year. After nearly two years of reduced demand due to the pandemic, air traffic was supposed to rebound heading into the summer, which investors hoped would lead to strong profits and help the industry pay down some of the debt taken on during the downturn.
The summer travel demand has arrived, and planes are flying full, but higher costs have been the real story of 2022 so far. A scarcity of pilots is limiting the ability for airlines to grow and putting pressure on labor costs, and the war in Ukraine has caused fuel prices to spike. It all means that airlines are seeing more revenue come in the door, but the higher expenses are offsetting the gains and causing margins to remain flat.
Source Fool.com
