Airline stocks rallied on Tuesday following a federal judge’s decision to throw out the CDC’s mask mandate for travelers.
America’s most popular airlines, including American, Delta, Southwest and United, confirmed Monday they would make mask-wearing optional on domestic flights. However, some added they would continue to insist on mask-wearing for some international flights, depending on the rules at the flight’s destination.
The increasing stock prices follow last week’s strong performance by U.S. air carriers. Delta forecasted strong consumer demand before Monday, despite soaring fuel costs and fares. So far, Delta executives say they’ve seen no adverse reaction from consumers over their ticket prices.
The Motley Fool reports how the end of a pandemic-era rule, along with lower oil prices, has airline stocks soaring:
The airline industry struggled during the pandemic and has been slowly on the mend since the rollout of the first COVID-19 vaccine. But the recovery has been choppy, with the constant threat of a new variant or an uptick in cases ever-present in investors’ minds.
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The rally in airline shares was also fueled by lower oil prices. The International Monetary Fund downgraded its global growth forecast overnight, which caused oil prices to fall as much as $5 per barrel. Fuel accounts for as much as 30% of airline operating expenses, so a decline in the price of crude can translate to better profitability for the carriers.
The public transportation mask mandate would have remained in place through at least May 3 after the Centers for Disease Control and Prevention announced they needed more time to study the BA.2 omicron subvariant. However, that changed Monday with U.S. District Judge Kathryn Kimball Mizelle’s ruling that the CDC acted “unlawfully.”
Despite concerns that rising fuel costs from Russia’s invasion of Ukraine would hurt the airline industry’s recovery, executives, like United’s chief commercial officer Andrew Nocella, admitted his business sector had so far weathered the storm surprisingly well. (Investors Business Daily)
Similar to Delta, though, he said United had been able to upsell customers on premium seats. And as flight-ticket prices start to rise, he said, “At this point, there is no demand destruction.”
“In fact, it’s the exact opposite,” he said. “There’s a lot of demand to fly for leisure customers, and business is catching up quickly, although we have a ways to go.”
Patrick Houck is an avid political enthusiast based out of the Washington, D.C., metro area. His expertise is in campaigns and the use of targeted messaging to persuade voters. When not combing through the latest news, you can find him enjoying the company of family and friends or pursuing his love of photography.
