Don't Judge Airlines on 'Weather' Performance: Analyst
Investors shouldn’t let airlines’ performance during bad weather, like the snowstorm this week, determine whether they invest in the industry, analyst Matt Jacob told CNBC Wednesday.
“The airlines have had a very difficult stretch with the severe weather,” said Jacob, a director and senior leisure, lodging and airlines analyst with ITG Investment Research, who added that weather doesn’t erode long-term prospects.
Jacob said Delta was the only airline to release numbers related to last month's storm. The company reported that it lost more than $40 million in December, which makes sense, said Jacob, because its routes cover the Northeast and Atlanta, where the storms hit. Atlanta is a Delta hub city.
He added that the post-Christmas storm didn’t have as negative an impact on ticket sales because a lot of the travel during the period was leisure-related (not business) and travelers simply rebooked their flights when airports re-opened.
A big storm during non-holiday times can hurt ticket sales, Jacob said, because when business travelers cancel, they tend not to rebook.
Vaughn Cordle, CEO of Airline Forecasts, said higher fuel prices will affect ticket sales and airline profits. The price of oil is up 18 percent over last year, which will translate into a 3 percent increase in fares, less travel and lower profits.