Airline Stocks Cleared For Takeoff In 2024, But Economic And Consumer Confidence Clouds Gather
Portfolio Pulse from Neil Dennis
Airline stocks are experiencing a surge in early 2024, with American Airlines, United Airlines, Delta Air Lines, and Southwest Airlines posting significant weekly gains. These gains are reflected in the U.S. Global Jets ETF, which includes these airlines as its biggest holdings. Despite the positive trend, airline stocks face potential headwinds such as economic slowdown, high interest rates, and geopolitical tensions affecting oil prices. Delta is favored by analysts with strong buy ratings, while American Airlines has announced expansion plans. Southwest Airlines is running a flash sale, and United Airlines is noted for its scale despite a high debt-to-asset ratio. An incident with an Air Alaska Group Boeing 737 Max 9 could lead to more affordable fleet replacements for airlines if Boeing reduces prices.
January 10, 2024 | 5:26 pm
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NEGATIVE IMPACT
Boeing may reduce prices for its aircraft following the emergency landing incident involving an Air Alaska 737 Max 9, potentially affecting its stock.
The negative publicity from the incident may force Boeing to offer discounts, which could impact profit margins and investor sentiment.
CONFIDENCE 70
IMPORTANCE 75
RELEVANCE 80
NEUTRAL IMPACT
Air Alaska Group faced an incident with its Boeing 737 Max 9, which could lead to more affordable fleet replacements if Boeing reduces prices.
The incident's impact on ALK's stock is uncertain, but potential fleet replacement costs could be reduced if Boeing offers discounts.
CONFIDENCE 65
IMPORTANCE 60
RELEVANCE 70
NEUTRAL IMPACT
SPDR S&P 500 ETF, which tracks the S&P 500 Index, gained 24% during 2023, outperforming the airline industry's ETF JETS.
While SPY's past performance is strong, it is a broad market ETF and its short-term impact from airline stock movements is likely to be minimal.
CONFIDENCE 75
IMPORTANCE 50
RELEVANCE 50
POSITIVE IMPACT
American Airlines saw an 11% increase over the past week and announced its largest-ever plan for tropical travel during the winter months.
The stock's recent performance and expansion plans indicate a positive outlook, which could attract investor interest in the short term.
CONFIDENCE 75
IMPORTANCE 80
RELEVANCE 90
POSITIVE IMPACT
Delta Air Lines is up 9.2% this week, with strong buy ratings from analysts and high revenue targets for the fiscal year.
Delta's unanimous strong buy ratings and positive revenue outlook could drive further stock appreciation in the short term.
CONFIDENCE 80
IMPORTANCE 85
RELEVANCE 95
POSITIVE IMPACT
U.S. Global Jets ETF, which includes the mentioned airlines as its biggest holdings, rose 6% in the past week.
The ETF's performance is directly tied to the airline stocks it holds, which have all seen recent gains, suggesting a positive short-term impact.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 100
POSITIVE IMPACT
Southwest Airlines increased by 7.4% and is running a flash sale with discounts on base fares, holding an average analyst rating of a hold.
The stock's gain and promotional sale could lead to increased travel demand, positively impacting the stock in the short term.
CONFIDENCE 70
IMPORTANCE 65
RELEVANCE 80
POSITIVE IMPACT
United Airlines posted a 10.1% gain this week and has an average analyst rating of a buy.
The positive analyst rating and significant weekly gain suggest a favorable short-term outlook for UAL's stock.
CONFIDENCE 70
IMPORTANCE 70
RELEVANCE 85