It’s the Airline Stocks Again: Ugly Day, Ugly Week, Ugly Long Term

by Wolf Richter, Wolf Street:

My Airlines Index plunged 14% for the week. But long-term, it’s even worse: -45% since Jan. 2018.

Airline stocks had a horrible day, waylaid by the general downdraft of the market, the spiking jet fuel prices, and the routing chaos around the Ukraine and Russia, along with passenger traffic that is still below where it had been before the pandemic on the lucrative international routes, and with the expense-account crowd being slow to show up.

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Here are the stocks of the largest US airlines in order of their losses today, and their closing prices.

  • United Airlines [UAL]: -9.1% to $36.71
  • American Airlines [AAL]: -7.1% to $14.59
  • Frontier [ULCC]: -6.4% to $11.50
  • Spirit Airlines [SAVE]: -6.3% to $22.32
  • Delta Air Lines [DAL]: -5.6% to $34.52
  • Alaska Air Group [ALK]: -4.4% to $49.14
  • JetBlue Airlines [JBLU]: -4.1% to $13.21
  • Southwest Airlines [LUV]: -2.4% to $40.68

My Airlines Index, which tracks these largest 8 US airlines by market cap, dropped 5.6% today and 14.8% for the week. It has been a very bumpy flight for airlines for months – I mean, for years. My index is down 45% since the beginning of 2018. After briefly recovering to pre-pandemic levels last spring, it hit one air pocket after another, and is now 29% below February 2020 (data via YCharts):

United’s 9.1% plunge today came “on what proved to be an all-around grim trading session for the stock market,” lamented the article-writing algo, named “MarketWatch Automation.” (I always thought I could never-ever be replaced by article-writing algos, but when they start coming up with phrases like “grim trading session,” I might need to do some reassessing here).

After having booked gigantic losses in 2020, including $12 billion by Delta, three airlines started making money in 2021:

  • Southwest: +$977 million
  • Delta: +$280 million
  • Alaska Air: +$478 million.

The others still lost money in 2021:

  • United: -$1.96 billion
  • American: -$2.0 billion
  • Spirit: -$473 million
  • Frontier: -$102 million
  • JetBlue: -$182 million

As of today, compared to February 2, 2020, airline stocks are down between 27% at the better end (Delta and Alaska) and 39% at the worse end (Spirit and Frontier the two biggest low-cost airlines in the US). By comparison, the S&P 500 Index, despite the recently “grim trading,” is up by 28% over the same period.

Spirit and Frontier, whose stocks are down the most, announced a month ago that they’d agreed to merge.

The year 2022 was going to be the big year, with international leisure and business travel revving back up. But the current situation, including the spiking prices for jet fuel, is producing a lot of jitters for airline stocks.

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