Travel has become a top priority for consumers, says Delta

Delta Air Lines, led by CEO Ed Bastian, says the post-pandemic travel boom is still going strong and won't just stop, which could make it a multi-year phenomenon. Many U.S. airlines are unable to accommodate the huge number of would-be travelers and cope with the high demand. Delta raised its full-year outlook for the second time in a month while posting the highest quarterly profit in its history. According to surveys, U.S. consumers have cut back on spending on goods and prefer to spend their money on experiences, benefiting airlines in particular. Such demand calls for more pilots to provide intense flights, but there is currently a shortage of pilots in the market. In addition, companies face a persistent shortage of new aircraft and spare parts, which exacerbates the fragility of the entire aviation industry.

Delta's stock performance over the past five years (Source: Google)* 

United Airlines and its pilots shake hands

US airline United Airlines has decided to address the shortage of pilots in the market by striking a deal with its divisional pilots for a significant pay rise after the union rejected a previous offer last year that included a cumulative pay rise of more than 14.5% and increases in overtime and training allowances. The Air Line Pilots Association (ALPA) says the new four-year contract gives pilots pay increases of 34.5-40.2 percent. In addition to the pay increases, the agreement includes substantial improvements in pilot pay, quality of life, vacation and other benefits. United Airlines CEO Scott Kirby said he is pleased with the resolution of the pilots' demands and that it will have a positive impact on United's United Next strategy. There is a shortage of approximately 10,000 pilots in the United States and this shortage is not expected to be resolved until 2027. Other airlines such as the aforementioned Delta, American Airlines and Southwest Airlines are also facing this problem, but it is estimated that they may soon be able to partially get rid of these problems as they are expected to hire approximately 8,000 new pilots this year.

United Airlines stock performance over the past five years (Source: Google)*

American Airline and JetBlue Airways dissolve their alliance

American Airline and JetBlue Airways have announced that they will begin canceling their three-year Northeast alliance on July 21, 2023, due to a court ruling that severely limits competition in the domestic market. This collaboration has allowed them to coordinate flights and pool revenue to the benefit of both parties. JetBlue is not appealing the ruling, arguing that the termination of its alliance with American makes the US Justice Department's objections "wholly without merit". American Airlines will, however, attempt to challenge the ruling by US District Judge Leo Sorokin. American is the largest US airline by fleet size, while JetBlue is the sixth largest. The split of the alliance will cause a mutual decline in revenue. American will no longer compete equally, especially in the New York market. Both companies assure customers that they will do everything possible to minimise the disruption caused by the split.

American Airlines stock performance over the past five years (Source: Google)*

Positive outlook due to good season

As you can see from the charts of all airlines, the pandemic season has dealt a heavy blow to the sector. Today, however, they are enjoying increased interest in their services, taking advantage of the boom that has occurred in recent months.* New orders for fleet expansion and an improved outlook suggest that they represent a good opportunity for investors.1]

Olivia Lacenova, principal analyst at Wonderinterest Trading Ltd.

* Past performance is no guarantee of future results

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or the current economic environment, which may change. Such statements are not guarantees of future results. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.