Airline stocks are down across the board today on widespread reports of travel delays and cancellations during the Fourth of July long weekend.
While airlines in the U.S. set records for processing passengers and overall travel demand this past weekend, the recovery in travel is being largely overshadowed by news of major flight delays and cancellations at airports across the U.S. Shares of major carriers such as American Airlines (NASDAQ:AAL), United Airlines (NASDAQ:UAL), and Delta Airlines (NYSE:DAL) are each down at least 2% today on the negative reports concerning the holiday weekend travel.
Nearly 2.5 million people passed through U.S. airport security checkpoints last Friday (July 1), according to data from the Transportation Security Administration (TSA). Another 4.3 million people were screened by the TSA on Saturday and Sunday (July 2 and 3). That’s the most people to fly in the U.S. since February 2020, before the Covid-19 pandemic hit.
However, the increased numbers led to increased congestion and delays at U.S. airports during the holiday weekend, with 27% of U.S.-based carriers’ arrivals delayed last Friday, per data from FlightAware. Another 464 flights were canceled on July 1. Delta Air Lines and American Airlines had the highest number of cancellations over the weekend at 117 and 113. One media report claimed that Delta offered passengers as much as $10,000 to get off a flight that was oversold.
Why It Matters
The negative reports of delays and cancellations has the airline stocks under pressure today. The ongoing chaos at U.S. airports is calling into question the ability of carriers to manage a resurgence in travel demand coming out of the global pandemic. Some politicians, notably Vermont Senator Bernie Sanders, are calling on Transportation Secretary Pete Buttigieg to financially penalize airlines for ongoing delays and cancellations.
At the same time, airlines are blaming the Federal Aviation Administration (FAA) for the delays, arguing that a shortage of air traffic controllers across the country is contributing to the ongoing problems at airports and contributing to flight delays and cancellations. The ongoing battle is leading to bad public relations for the airlines, which are only now getting back to full capacity following the pandemic.
What’s Next for Airline Stocks
Stocks of major U.S. airlines are taking a hit today on widespread media reports of travel chaos during the July Fourth long weekend. Sadly, the negative stories are overshadowing the fact that travel demand in the U.S. is now back to pre-pandemic levels.
On the date of publication, Joel Baglole 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 InvestorPlace.com Publishing Guidelines.