SAVE - Airline bookings are sluggish just ahead of planned capacity increases

2023-05-22 07:48:49 ET

The sluggish trends for airline bookings in the U.S. continued in the latest week of data tracking by Bank of America.

The firm said all sales channels showed some deceleration with bookings. System net sales fell 3.5% in comparison to 2019 for the week ending May 14 compared to the 0.4% decline last week. Volumes decelerated sequentially to a -9.6% pace vs 2019 compared to -8.3% last week, while pricing showed a modest deceleration to +6.7% vs 2019 from +8.6% in the prior week.

Based on the most recent guidance updates, BofA analyst Andrew Didora estimated domestic capacity could be 7% ahead of 2019 in Q4 of 2023 compared to just 2% ahead of 2019 in Q2 of this year. The higher capacity is seen being largely driven by utilization as pilot training bottlenecks ease, and the industry becomes reliant on aircraft deliveries in the near term.

"In our opinion, the shape of this capacity add back will be important to watch. If the airlines grow as planned, there could be a supply/demand imbalance, particularly if the macro risks create demand softness. However, airlines have been growing less than planned for the past year, which could provide some pricing support."

Didora noted the only thing certain right is a lot of uncertainty around the second half of the year, which could make for a turbulent period for investors in the airline sector.

Airline stocks premarket: American Airlines ( AAL ) -0.3% , Delta Airlines ( DAL ) +0.1% , Southwest Airlines ( LUV ) +0.1% , United Airlines ( UAL ) -0.2% , JetBlue ( JBLU ) +0.1% , Hawaiian Holdings ( HA ) +0.5% , Alaska Air Group ( NYSE: ALK ) +0.1% , Allegiant Travel ( ALGT ) inactive, Spirit Airlines ( SAVE ) +0.4% , Mesa Airlines ( MESA ) inactive, SkyWest ( SKYW ) inactive, Sun Country Airlines ( SNCY ) inactive, and Frontier Group ( ULCC ) -0.4% .

More on airline stocks:

• American-JetBlue Northeast Alliance blocked by judge on antitrust grounds
• Southwest Airlines And The Pilot Strike
• Why American Airlines Might See Strong Upside - And One Reason To Avoid It
• Seeking Alpha's Quant Ratings for all airline stocks

For further details see: