Airline stocks were hit Tuesday as investors felt the brunt of thousands of flight cancellations while winter storm Stella pounded the Northeast.
Nearly 6,800 flights have been canceled in the U.S., according to FlightAware, including more than 1,400 in just the New York area. There have also been over 4,000 delayed flights. Read more about Stella’s impact.
Stella has hurt the sector when it was already down, as a number of airlines have recently cut unit revenue outlooks amid disappointing February bookings data.
The NYSE Arca Airline Index
slumped 2.2% to the lowest close since Dec. 5.
Shares of Southwest Airlines Co.
tumbled 3% to suffer a seventh-straight loss, the longest losing streak since the seven-day stretch ending July 28, 2011.
Southwest had the most flights canceled at 919, according to FlightAware, representing 22% of the carrier’s total flights.
American Airlines Group Inc.
was second with 707, or 23%, of its flights canceled, sending the stock down 2.7% toward the lowest closing level since Nov. 4.
JetBlue Airways Corp.
was third with 650, or 64%, of its flights canceled, followed by United Continental Holdings Inc.
which has canceled 571, or 28%, of its total flights. JetBlue’s stock shed 2.1% and United’s stock slumped 4.1% to a fourth-month low.
Adding insult to injury, UBS analyst Darryl Genovesi said he now expects first-quarter passenger revenue per available seat mile, a closely watched unit revenue metric, for the industry to be about flat with year-ago results, “which is materially worse than our prior outlook” following PRASM guidance cuts by most of the airlines he covers.
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The sector’s selloff looks even worse when considering crude oil futures prices tumbled to a 3 ½-month low, as the Organization of the Petroleum Exporting Countries’ month report released Tuesday raised concerns over increasing supply. Lower oil prices tend to benefit airline stocks as it sparks hopes of lower fuel costs.
Over the last five years, the Arca Airline Index and continuous crude-oil futures
have a correlation coefficient of -0.67, with -1.0 meaning a perfect inverse relationship.