Flight Cancellations, Bad Weather, Create Travel Chaos During Shutdown

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00:00No surprise that this weekend was insane.

00:02Government shut down, the weather.

00:03How much does that affect the airlines themselves?

00:06It does affect the airlines because, one, you have to, all these passengers are stranded.

00:11Two, you've got aircraft and crews that are out of place.

00:14And that means you have sort of relocation flights.

00:16Aircraft are not in the right place at the right time.

00:19And that sort of adds chaos to a system which is already sort of,

00:23they're having to cut flights and having to sort of make changes on the fly.

00:26And that sort of makes things much harder for the airlines.

00:29So, there's a snowball effect here, I imagine, right?

00:33No pun intended, but I just can't believe things get any better rather than worse over the next few days.

00:40We get bad weather in Chicago, it snows there, and the government shut down,

00:45even if we have a solution by Friday, still is going to hurt this week.

00:50It is going to hurt this week.

00:51I mean, we're seeing the government already talking about restrictions that will ramp up to 10% by the end of the week.

00:57And so, the longer the shutdown actually lasts, I mean, we're still not quite sure when the shutdown will actually end.

01:03And the longer this lasts, air traffic controllers still aren't being paid.

01:07You still have restrictions on flight and the bad weather.

01:10So, it's all going to sort of snowball into more cancellations, more delays,

01:15and more frustration for travelers at the airport.

01:17Enough so that it would extend into Thanksgiving, or if there's an end this week, it could be cleared by then?

01:23It's still to be determined how quickly the government rolls back these restrictions,

01:27and also what the other mitigating factors in terms of weather and other things are.

01:32So, it's still up for debate whether Thanksgiving travel or not will be disrupted, but we will have to sort of see.

01:38Nonetheless, we see airlines doing well.

01:42I mean, you can see on the sidebar here, Southwest is up in the pre-market.

01:47American Airlines is up in the pre-market.

01:49United Airlines is up in the pre-market.

01:51So, the rally in the shares doesn't reflect the chaos on the ground.

01:57I mean, we did see sort of the shares take a beating well.

02:00They talked about the restrictions.

02:01And so, this is sort of a more positive approach, saying that, okay, air travel might be back,

02:07given the fact that the government shutdown looks like it's ending.

02:11It was a period, though.

02:12We saw, for example, on Friday, the latest University of Michigan Sentiment Survey,

02:16where it looked at the lowest since 2021.

02:18These airlines have reported people who are willing to pay up for things like business,

02:22who are enthusiastic about traveling.

02:25A period like this, could that go some way to dent that sentiment?

02:28It could dent sentiment, because people who are sort of more willing to travel

02:32might hold off and might think twice about booking travel,

02:35especially as they watch the chaos unfold.

02:38And so, we still have to wait and see what the booking trends look like

02:42when the airlines sort of give us more of an update

02:44as to what the impact of the shutdown and the restrictions were.

02:48But in terms of sentiment, it definitely plays into sentiment.

02:52I mean, airline stocks in general, at least the big ones, right,

02:55have all rallied since Liberation Day.

02:59So, they were higher at the beginning of the year,

03:01but they took a huge hit into April.

03:04And since then, they're all on the uptrend,

03:08at least United, American, Delta.

03:11Does this put that at risk?

03:13I mean, United and Delta had great results,

03:16and they talked about how they have a consumer base

03:18that isn't as affected by inflation and higher prices,

03:22because they are sort of more immune to those things,

03:25and they've sort of gone more premium.

03:27They've sort of changed their aircraft mix to add more premium seating.

03:31And that's why we've seen the low-cost carriers struggle a little more.

03:34But in terms of sentiment, yes, there was a...

03:37The airlines also cut their estimates for the year

03:40when the Liberation Day tariffs came around,

03:42because they weren't quite sure what the economy looked like.

03:44And then they've sort of been more bullish and more optimistic

03:47about the prospects for next year.

03:48So, that's why airline stocks have been where they are.

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