Airlines have soared to new heights, but storm clouds are shading investors’ optimism
The business of economy class… 2024 is gearing up to be another banner year for travel. A record 4.7B passengers are expected to take to the skies, with airline revenue forecast to climb to a fresh high of $964B. In a November IATA survey, a third of travelers said they were flying more than prepandemic, and nearly half said they’d travel even more this year.
Last week: Delta reported a record $54.7B in annual revenue. Still, its stock sank 8% after the Biscoff biggie trimmed its profit guidance for the year, citing higher costs.
Next week: United, Alaska, and Southwest are set to unload their quarterly #s. While demand’s been strong, headwinds are rising…
Houston, we’ve had a problem… and it's not the guy snoring on your shoulder. In September, American, Southwest, and Spirit slashed their profit outlooks for the summer quarter as pricey fuel and new pilot-pay deals squeezed margins. Meantime, pandemic-era supply-chain snags (think: parts shortages, delays) are still pressuring profits. Boeing's recent midair blowout on an Alaska flight could make meeting demand even harder. Alaska and United — the two US carriers that use Boeing’s 737 Max 9s — have canceled thousands of flights.
Investors care about the destination… Delta’s record annual revenue is a positive sign for the industry, but investors plunged the stock on a cloudier outlook for this year. Investors also worry that officials will discover more 737 Max probs during their investigation. Despite lively demand, global airline capacity is expected to be constrained until at least 2025.