Airline stocks are in decline today due to the storm sweeping across the American south. Hurricane Ian made landfall in Florida yesterday, and could make landfall again soon outside of Charleston, South Carolina.
CNN reported that the first major hurricane of the season has unleashed “catastrophic floods and life-threatening storm surge” since it made landfall. According to the outlet’s experts, it is likely that these dangerous conditions will continue as the storm moves further north. This means that airline stocks are likely to continue struggling until the turbulent weather conditions finally subside.
What’s Happening with Airline Stocks
Every important name among airline stocks is in the red today. Delta Air Lines (NYSE:DAL) is currently down 3.5%. American Airlines (NASDAQ:AAL) has displayed an even worse performance, falling 4% since markets opened. Things have gone slightly better for Southwest Airlines (NYSE:LUV), down less than 3% but still in the red.
After a season of macroeconomic headwinds including delays and cancellations, actual environmental headwinds caused by hurricane season are hitting the sector. The numbers clearly illustrate that Hurricane Ian is keeping plenty of flights grounded until conditions improve. Reuters reported that:
Airlines canceled 2,163 flights Wednesday as a number of Florida airports temporarily halted operations, including Tampa, Orlando, Sarasota-Bradenton, Melbourne, Daytona Beach, Naples and St Petersburg/Clearwater.
Airline tracking website Flightaware said 1,935 flights for Thursday had been canceled and 738 Friday flights scrapped. Airlines canceled 403 flights Tuesday ahead of the storm.
Those statistics aren’t encouraging, and they only affect the state of Florida. If the hurricane continues its path northward, other airports will end up grounding or otherwise rescheduling flights. While some areas may not end up having to cancel flights, they could be forced to impose delays, leading to further complications both for travelers and for airline stocks.
What to Expect
Investors in airline stocks should continue bracing for turbulence and hope that conditions will improve in the coming week. These events are not a reason to sell, but investors should follow the example of passengers in flight and brace for turbulence ahead.
Everyone should remember that like weather conditions, turbulent markets ultimately calm down. The holiday season is approaching and it will likely lead to a surge in travel demand, even with record-high flight prices.
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 InvestorPlace.com Publishing Guidelines.
