Air travel over Memorial Day weekend convincingly beat prepandemic levels in a big sign that demand remains strong heading into the crucial summer season. The surging demand helped lift airline stocks early Tuesday, though the markets remains skeptical about the sector’s optimism.
Close to 9.8 million passengers passed through U.S. airport checkpoints over the four-day Memorial Day weekend, Friday through Monday, the Transportation Security Administration said. That’s around 300,000 more than the same weekend in 2019.
Friday was the busiest day since the pandemic ended, as 2.74 million travelers passed through airport gates.
Airline stocks rose early Tuesday, the major carriers were up around 2-3% shortly after the open.
United Airlines Holdings
(UAL) rose close to 2%,
Delta Air Lines
(DAL) climbed 3%, while
American Airlines Group
(AAL) was 1.8% higher.
Whether demand will stay strong or not is a key question facing investors when it comes to airline stocks. While Memorial Day travel is clearly a good sign, it is still just one weekend, and more data may be needed to rid investors of their skepticism about the major carriers’ full-year earnings guidance.
Before the weekend, there was little doubt over the strength of international demand but there were question marks domestically. Ticket prices for domestic flights fell in April—the first year-over-year decline after 25 consecutive months of increases, according to data from Airlines Reporting Corp., which processes travel-agency ticket sales.
One bumper holiday weekend won’t eradicate those concerns, but data in the weeks ahead will make it clear who is right, the market or the airlines.
Write to Callum Keown at callum.keown@barrons.com
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