Flight cancellations spilled over into Martin Luther King Jr. Day as airlines battled with freezing temperatures and heavy snow.
The sector endured a sharp selloff Friday after
Delta Air Lines
’ outlook for 2024 disappointed investors. The weekend travel disruption, which is continuing Monday, is another blow for airlines and could ultimately hit first-quarter earnings.
A few days of disruption wouldn’t typically have much of an impact, however the first three months of the year are historically the weakest for U.S. airlines and travel over the Martin Luther King Jr. Day and Presidents Day weekends usually play a significant role.
Close to 3,000 flights within, into, or out of the U.S. were canceled over the weekend, according to flight-tracking website FlightAware. A further 1,477 were canceled as of 6 a.m. Eastern Time Monday.
Southwest Airlines
canceled 615 flights, or 15% of its daily schedule, early Monday. United Airlines canceled 274 flights, or 10% of its schedule, while Alaska Airlines canceled 153 flights, or 22%. United and Alaska have canceled around 7% and 20% of their daily flights, respectively, in recent days due to the grounding of
Boeing
737 MAX 9 jets.
Denver International was among the worst-hit airports, with 16% of outbound and 17% of inbound flights canceled early Monday. More than 30% of flights departing Chicago Midway International were canceled.
Delta stock tumbled 9% Friday after the carrier said it expected 2024 earnings to be between $6 and $7. The airline previously had a long-term target for EPS of more than $7 this year. The first earnings of the season certainly rattled investors as
United Airlines
stock fell 10.6% and
American Airlines
declined 9%.
Southwest Airlines
fell 4% and
JetBlue Airways
was down 6%.
TD Cowen analysts said Delta’s slump has created a buying opportunity for investors, in a note Friday. They reiterated their Outperform rating on the stock and price target of $49, implying 27% upside to Friday’s price.
Helane Becker wrote that management were “being conservative” with the $6 to $7 earnings-per-share range. “But there are a lot of issues that could derail results (volatile fuel prices and supply chain pressures especially) and a lot of positive surprises that would have to occur for earnings to exceed $7.”
United Airlines is next to report earnings on Jan. 22. Until then, the current disruption won’t help the sector’s first-quarter guidance.
Write to Callum Keown at [email protected]
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