Today, airline stocks have lift-off, with each of the three major U.S. airlines surging to new year-to-date (YTD) highs. United Airlines (NASDAQ:UAL), Delta Airlines (NYSE:DAL) and American Airlines (NASDAQ:AAL) have all surged between 3% and 6% in early afternoon trading.
This move appears to indicate investors have a brighter outlook for airline stocks in 2022. Amid what could be the largest spike in Covid-19 cases due to the omicron variant, there’s room for hope among those invested in airline names. That’s a good thing, because right now, there are many headwinds this sector is battling.
Besides the pandemic, costs are expected to rise this quarter. Higher fuel prices, spurred by indiscriminate inflation, have margins under pressure. On top of that, a slew of canceled flights have some investors concerned about the near-term revenue outlook for airlines.
However, today there’s a big catalyst taking the “big three” airlines higher. Let’s dive into what investors are watching with these stocks.
Airline Stocks Surge Amid Positive Earnings Report
Delta Airlines was the first to report fourth quarter earnings before the bell today. All airline stocks rose on news of the company’s strong numbers. However, interestingly, Delta’s move higher today has been the weakest among its peers.
Despite the aforementioned headwinds Delta sees as problematic, this company has been able to provide a solid outlook moving forward. The company states that its operations have stabilized, with travel demand remaining robust. Accordingly, this past quarter, Delta saw its strongest revenue and bookings numbers since 2019.
For the period, DAL reported revenue of $9.47 billion, which beat analyst expectations of $9.21 billion. These results signaled that holiday travel this past year has come back; travelers are ready to return to normal.
That said, Delta’s CEO was quick to caution that the coming four to six weeks may provide some turbulence. The severity of this latest Covid-19 wave has caused some travelers to push back their travel plans for a few weeks. Still, the outlook in the months to come appears rosy and investors seem to be willing to look into the future with airline stocks. (I mean, you kind of have to).
On the date of publication, Chris MacDonald did not hold (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 InvestorPlace.com Publishing Guidelines.