Airline Stocks Face Turbulence As Shutdown Turmoil Causes Massive Delays, Cancelations Over Weekend

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The Federal Aviation Administration last week ordered airlines to reduce domestic flights at the country’s 40 major airports by 10% to alleviate the load on airport infrastructure.

  • About 5,163 flights were cancelled across U.S. airports over the weekend, according to FlightAware.
  • Several airports experienced long queues and chaos, and operators are concerned about the length of the federal airline reduction plan. 
  • Airline stocks rebounded and closed in the green last week.

More than 24,000 flights were delayed and over 3,100 were cancelled on Sunday, according to FlightAware — slightly higher than the previous day’s totals — as staffing shortages and government-mandated flight cuts threw weekend air travel into disarray.

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Media reports and social media posts showed long queues at several airports, including George Bush Intercontinental and Hartsfield-Jackson Atlanta International, and planes appearing grounded and lined up on the tarmac.

FAA Directive 

The Federal Aviation Administration last week ordered airlines to reduce domestic flights at the country’s 40 major airports by 10% to alleviate the load on airport infrastructure. The cuts are intended to maintain safe skies as the government shutdown drags on and air traffic controller shortages persist.

How Airline Stocks Reacted

The cancellations are expected to weigh on the earnings of major U.S. carriers, such as Delta Air Lines, American Airlines, United Airlines, and Southwest Airlines, even though their shares rebounded last week, rising between 2.6% and 7.1%.

According to Cirium data, United recorded the highest cancellation rate relative to the number of flights it operates. Over 4% of United flights were cancelled on Friday, while Delta and American had just under 4% of their flights cancelled.

On Stocktwits, the retail sentiment was ‘neutral’ for DAL and LUV, and ‘bearish’ for UAL and AAL as of late Sunday.

Growing Concern

For now, flight operators, their investors, and travelers are concerned about how long the reduction will remain in effect. Transportation Secretary Sean Duffy told Fox News on Friday that the reduction could reach as much as 20% if the ongoing government shutdown worsens air traffic control staffing.

Last week, about 500 companies and groups operating in the travel industry, including transportation and hotels, signed a letter urging Congress to pass the spending bill and warning of potential chaos ahead of the holiday travel season if the shutdown continues.

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