Airline Stocks Alert: Why DAL, UAL and AAL Are Flying Higher Today

As markets head into a new month, one industry has enjoyed a very good week. Airline stocks have been climbing steadily all week and as it ends, they are up across the board. Prices for Delta Airlines (NYSE:DAL), United Airlines (NASDAQ:UAL) and American Airlines (NASDAQ:AAL) are all in the green. Even Southwest Airlines (NYSE:LUV), a company rocked by bad publicity amid flight cancellations, is seeing share prices rise. We all knew that demand for travel would rise as the holiday season approaches, but there are other factors at play helping revive this sector.

The front view of a passenger airplane with a sunset in the background.

Source: Shutterstock

So what do you need to know now?

What’s Happening with Airline Stocks?

Today began with some good news that hiring has spiked for the month of October with payrolls increasing by 531,000. Lack of staff has certainly been a contributing factor for airlines recently, as they struggle to man flights. Additionally, the outlook for markets across most sectors has been generally positive today after Pfizer (NYSE:PFE) reported that its new pill has the ability to reduce Covid-19 hospitalizations or deaths by as much as 89%.

Although airline stocks have been rising all week, they all saw significant gains today. Delta is up by almost 7% while United and American Airlines have seen shares rise by 6% and 4% respectively, as of this writing. For the week, all three stocks have risen by 12%, more in the cases of United and American.

Given how much their industry has suffered throughout the pandemic, this type of rebound is impressive.

Why It Matters

Just last week saw American Airlines cancel hundreds of flights, citing a staffing shortage. If the industry is making progress filling its employment voids, it makes sense that investor confidence would be up. It also makes sense that the good news from Pfizer would help airline stocks rise, as treatment developments help inspire consumer confidence in traveling. This is further indicated by the fact that cruise stocks are also up today, such as Royal Caribbean  (NYSE:RCL) and Carnival Corporation (NYSE:CCL), both of which are up by 10% on the day.

It’s also worth noting that the supply chain crisis has created a unique opportunity for airlines to increase their cargo capacities. InvestorPlace analyst Eric Fry recently discussed this, outlining the potential for air transportation. According to an airline group, cargo capacity increased across the sector in August 2021 by more than 7%. Statista forecasts that this trend will grow throughout 2022.

What It Means

Airlines may fly in the sky, but their stocks seem to be getting back on track as the pandemic’s effects wind down. The holidays are coming, and Americans will be more anxious to travel than ever. Demand isn’t going to slow down within the next few months, especially as more protections against the virus arise.

Throughout 2021, the biggest threat posed to airlines has been the staffing shortage. If today’s jobs report is any indication, though, we may see that trend start to reverse in the months to come, helping airlines staff their full flights. We should be expecting airline stocks to soar in 2022.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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