Record number of tourists during the holidays: Shares of many airlines rise for the first time since before the pandemic

By TravelWiseJan 1, 2024 20:09 PMNews
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Record number of tourists during the holidays: Shares of many airlines rise for the first time since before the pandemic
Record number of tourists during the holidays: Shares of many airlines rise for the first time since before the pandemic. Source: Freepik

For the first time since 2019, airlines achieved annual growth, ending a difficult period after the pandemic grounded planes and hit the industry. The S&P Supercomposite Airlines Industry Index is up 7.1% this year, its best annual performance since a 12% rise four years ago.

The return to positive performance reflects the sustained consumer demand for experiences. SkyWest Inc. leads the nine-member index with a 217% increase, followed by Delta Air Lines Inc. and Allegiant Travel Co. with a 20% increase," TheSpokesman-Review writes.

Record holiday travel helped improve the industry's financial outlook: Delta, JetBlue Airways Corp. and Southwest Airlines Co. all report strong year-end bookings.

"Valuations have been rising recently as investors look to lower fuel prices, which could provide an opportunity to lower fares and support demand with little or no impact on earnings," said Bloomberg Intelligence analyst George Ferguson.

The airline index is still far from the 52-week high it set in July, and this year's jump won't make up for the roughly 56% it lost over the previous three years.

There is also a risk that travellers will cut back on their vacations in the new year as employers tighten requirements for returning to the office and consumers slow down after relying too heavily on their credit cards to finance everything from "revenge" to expensive restaurant meals.

However, many are optimistic that the end of the Federal Reserve's tightening cycle will help boost consumer confidence and support leisure and corporate travel.

Delta will be the first major U.S. airline to release its fourth-quarter results and 2024 outlook on January 12.

"While the economic slowdown is expected to continue in the form of a moderate recession in 2024, it is not expected to escalate into the recession we are used to," wrote Raymond James analysts led by Savanthi Syth. "Importantly, it may not be accompanied by the typical employment cuts due to a tight labour market, which will potentially support travel demand."

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