Thursday, April 13, 2023

After a Century of Flight, Who’s Leading the Airline Industry Now? DAL, LUV, UAL, AAL

After a Century of Flight, Who's Leading the Airline Industry Now? DAL, LUV, UAL, AAL

By Andy Swan

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December 17, 1903, was a particularly windy day on the mountainous sand dunes of Kill Devil Hills, North Carolina.

But after four years of experimenting with rudimentary gliders, and a real, working engine now mounted to their upgraded 40-foot flyer, 27-mile-per-hour winds weren't about to come between the Wright brothers and destiny.

Orville won the coin toss to pilot the aircraft that day and after a few false starts, managed to fly 852 feet in just under 60 seconds. It was a masterful feat that ultimately triggered the global $513 billion commercial airline industry we know today — but it wasn't without turbulence.

The Wright Brothers faced their fair share of headwinds that fateful December day and in the century since, so has the U.S. airline industry.

Any number of regulatory issues, economic instability, rising oil costs, terrorist attacks, heightened security measures, antiquated software… and, of course, pandemics — can (and have) threatened to take down even the most powerful jet-setting brands.

After 75 years in operation, fuel costs nearly tanked Delta (DAL) in 2004 when the company was forced into bankruptcy. It recovered — as did American Airlines (AAL) and United (UAL) after their own brushes with bankruptcy.

Southwest (LUV) has faced its share of challenges, too — most recently falling victim to outdated scheduling and communications systems that led to mass flight cancellations and stranded thousands of customers.

Yet each time facing headwinds, just like the Wright Brothers, the industry has proved resilient.

Delta, American Airlines, United, and Southwest are still the biggest birds in the sky.

And after months of being cooped up indoors due to COVID-induced lockdowns and nearly $220 billion in industry-wide losses as a result, we saw that same resilience on display in 2022 as families and individuals rushed to book trips to exotic destinations to make up for lost time.

Flight demand soared last year as airline stocks staged a recovery of their own:

Between May 2020 and May 2021, shares of DAL and LUV bounced back 90% or more, UAL over 100%, and AAL 130%.

The world is now slowly returning to normal, airline demand has stabilized, and their stock prices have come back down to earth:

But as history has shown, this is an industry that always has to be ready for headwinds — and there are a few that will need to be addressed this earnings season.

So with these big four jet-setters reporting results over the next two weeks, I joined the guys over at TD Ameritrade for a live Fast Market segment to check in on everything investors need to know: