Live Markets: Airlines ascend on strong demand despite margin headwinds

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06/02/2024 16:41

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    AIRLINES ASCEND ON STRONG DEMAND DESPITE MARGIN HEADWINDS
Airline stocks are flying high on Tuesday after Frontier Group
Holdings'  ULCC.O  surprise breakeven earnings provided some
lift; analysts expected the carrier to post a 23 cents/share
loss.
    The S&P 1500 Airlines index  .SPCOMAIR  was last up 2.9%,
with every constituent green and all but Skywest  SKYW.O  up
more than 2%.
    One would think generally soft crude prices  CLc1  - WTI
front-month fell 18.8% in the fourth quarter - must have given
commercial carriers a boost.
    But in fact, their margins have come under pressure.
    On Friday, in her latest edition of "Takeoffs and Landings"
Helane Becker of TD Cowen identifies labor costs (recent
contract negotiations led to "significantly higher wage rates,"
she writes), maintenance and landing fees as airlines' three
biggest expenses.
    But what about the demand side of the coin?
    "The 2024 outlook by the management teams is continued
strong international leisure traffic," Becker says.
    Seems like the perfect opportunity to revisit the
Transportation Security Administration's (TSA) daily throughput
data. 
    In a word, the number of people taking off their shoes and
shuffling through domestic airport security screening is on the
rise. 
    Over the past weekend, from Friday Feb. 2 through Monday
Feb. 5, TSA throughput is up 4.7% compared with the same weekend
in 2023. 
    The fact that the airfare segment of CPI has shown
year-on-year declines for the last consecutive nine months
hasn't hurt matters.
    "As we move further into this decade, we are likely to see a
lot of the inflationary cost pressures start to abate," Becker
says. "As a result, we are more positive on the outlook than
we've been for a while."
    
    (Stephen Culp)
    *****
    
    
    FOR TUESDAY'S OTHER LIVE MARKETS POSTS:
    
    U.S. STOCKS SUBDUED, AWAITING MORE FED SPEAK - CLICK HERE
    
    MARKET BREADTH: TAIL OF TWO TAPES - CLICK HERE
    
    BEING BULLISH ON EUROPE INC, DESPITE THE WEAK MACRO - CLICK
HERE
    
    FED CUTS, RESILIENT GROWTH AND EARNINGS TO LIFT STOCKS -
CLICK HERE
    
    HOW TO GET AHEAD IN HIBERNATING MARKETS? - CLICK HERE
    
    EUROPE STOCKS TICK UP ON SOARING OIL AND GAS SHARES - CLICK
HERE
    
    EUROPEAN FUTURES POINT TO BUOYANT OPEN - CLICK HERE
    
    A DOSE OF REALITY FOR THE RATE CUT RALLY - CLICK HERE
    
    

     
 

    
    
    
    
    
    
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
earlytrade02062024    https://tmsnrt.rs/494wVuz
TSA throughput    https://reut.rs/3Uv0zog
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 (Terence Gabriel is a Reuters market analyst. The views
expressed are his own)