ULCC - Airline stocks lose altitude amid market jitters airfare declines

2023-03-13 16:19:23 ET

Market turmoil appeared to weigh on the airline sector as the sector ( NYSEARCA: JETS ) -3.71% declined sharply on Monday.

The implications of bank failures are important for the industry that has counted on a steady return to pre-pandemic travel trends for both consumers and businesses. As both businesses and leisure travelers now likely tighten belts, the industry could see flagging demand in the near term.

According to TD Cowen, total average fares declined 3% year over year and over 7% week to week into the start of March, even before the sudden bank crisis. Passenger traffic was flat as compared to March 2019.

Mesa Airlines ( MESA ) -12.5% led decliners on Monday as JetBlue Airways ( JBLU ) -5.84% , Hawaiian Airlines ( HA ) -6.22% , Volaris ( VLRS ) -6.11% , Allegiant Travel Company ( ALGT ) -5.22% , Alaska Airlines ( ALK ) -4.38% , and Sun Country ( SNCY ) -5.11% also declined sharply. Southwest Airlines ( LUV ) -5.22% led declines among major airlines, followed by Delta Air Lines ( DAL ) -4.23% , United Airlines ( UAL ) -4.2% , and American Airlines ( AAL ) -3.95% . Low-cost carriers Frontier Group ( ULCC ) -2.2% and Spirit Airlines ( SAVE ) -0.41% marked comparatively smaller declines.

Additionally, TD Cowen’s analysts noted that January cargo volume declined 14.9%, 15.3% in December, 13.7% in November, and 13.6% for the month of October. As FedEx ( FDX ) is due to report Q3 earnings on Thursday, the bank’s analysts remain cautious given downbeat trends in air cargo.

Read more on Melius’ top picks in the airline industry .

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