{"id":64305,"date":"2023-09-22T16:52:57","date_gmt":"2023-09-22T20:52:57","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/airline-stocks-soared-in-the-last-government-shutdown-this-time-is-different\/"},"modified":"2023-09-22T16:53:04","modified_gmt":"2023-09-22T20:53:04","slug":"airline-stocks-soared-in-the-last-government-shutdown-this-time-is-different","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=64305","title":{"rendered":"Airline Stocks Soared in the Last Government Shutdown. This Time Is Different."},"content":{"rendered":"
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Airline stocks are on an awful run and a government shutdown is the last thing the industry needs right now.\u00a0<\/p>\n

In the event of a shutdown, air-traffic controllers and Transportation Security Administration officials would have to work without pay\u2014which the White House said could lead to delays and longer wait times for travelers at airports.<\/p>\n

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But history suggests it may not be all that bad, at least for the stocks. Shares in major U.S. airlines rose an average 9.4% during the last federal government shutdown, which lasted a record 35 days from Dec. 22, 2018 to Jan. 25, 2019.
\n Southwest Airlines
\n (ticker: LUV) was the best performer, climbing 19.6%, according to Dow Jones Market Data. In fact, only one carrier\u2014
\n Delta Air Lines
\n (DAL)\u2014fell over that period, slipping 3.5%.<\/p>\n

Of course, the shutdown wasn\u2019t a factor driving those gains, but it didn\u2019t exactly derail the sector\u2019s rally. Despite longer security lines than usual, and some significant delays, the impact on airlines wasn\u2019t severe.\u00a0<\/p>\n

The day before the government reopened, Southwest estimated a $10 to $15 million revenue hit from the shutdown in January 2019. It went on to report revenue of $5.1 billion in the first three months of the year, a record for the quarter.\u00a0<\/p>\n

While the impact may be minor again if a shutdown does begin on Oct. 1, history is only a guide when it comes to stock performance. It\u2019s a far different industry that now awaits another potential shutdown.<\/p>\n

The rally during late 2018 into early 2019 coincided with a strong fourth-quarter earnings season as airlines surprised to the upside, played down the impact of the shutdown, and gave upbeat commentary on the year ahead.<\/p>\n

Fast forward to the present day and airlines are facing mounting headwinds, including elevated fuel prices, and signs of a slowdown in domestic demand. After a stellar first half of the year, airline stocks have had a terrible run. The U.S. Global JETS exchange-traded fund (JETS) has fallen 21% since its July peak.<\/p>\n

Against that backdrop, a shutdown still has the potential to sour sentiment further. Particularly as the U.S. Travel Association estimates that a shutdown this year would have a greater impact than that of its predecessor. It would cost the U.S. travel economy $140 million a day, the organization estimated Wednesday. That\u2019s more than the $100 million a day estimated losses in the 2018 to 2019 shutdown.<\/p>\n

It said a shutdown would hamper the U.S. air travel system with more flight delays, longer screening lines and setbacks to modernization plans. It added that 60% of Americans would cancel or avoid air travel if a shutdown took place, suggesting even more harm to the industry.<\/p>\n

Write to Callum Keown at callum.keown@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Airline stocks are on an awful run and a government shutdown is the last thing the industry needs right now.\u00a0 In the event of a shutdown, air-traffic controllers and Transportation Security Administration officials would have to work without pay\u2014which the White House said could lead to delays and longer wait times for travelers at airports. […]<\/p>\n","protected":false},"author":1,"featured_media":64306,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-64305","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nAirline Stocks Soared in the Last Government Shutdown. 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