A tale of two skies: Southwest and Delta shares take off in different directions

After a bumpy month for all of the big four US airlines (they’ve shed about $24 billion combined), two carriers have been singled out by Wall Street on Tuesday.

Shares of Southwest Airlines climbed more than 10% in early trading, while shares of Delta Air Lines are down around 5%, significantly cooling off their up to 14% plunge after market close on Monday.

Investors are cheering news that Southwest will begin charging passengers to check bags for the first time — a significant pullback from its yearslong two free checked items policy. “Two bags fly free” is even a registered Southwest trademark. The move adds to a long list of recent cost cuts, some of them prompted by activist investor involvement, that include laying off 15% of the airline’s corporate workforce, ditching its open seating policy, and freezing hiring and promotions.

Delta’s sell-off, on the other hand, has to do with a deep cut to its first-quarter sales outlook yesterday evening. The airline said it now expects sales to grow 3% to 4%, down from the 7% to 9% it said as recently as January. Delta cited a reduction in consumer and corporate confidence as the reason for the reduction.

American Airlines similarly slashed its guidance on Tuesday, saying it now expects revenue to come in flat this year, as opposed to its guidance of up to 5% growth just two months ago.