U.S. airline stocks ease off of multi-week highs as S&P 500 gives up gains

KEY POINTS

• Airline shares were nearing the highest closing prices since June as federal data showed travelers returning to air travel.
• Carriers and their labor unions are pushing for another $25 billion in federal support to hold onto jobs until the end of March.

A JetBlue Airways plane taxis next to American Airlines, Delta Air Lines and Alaska Airlines aircraft at Reagan National Airport (DCA) in Arlington, Virginia, on Monday, April 6, 2020.

Andrew Harrer | Bloomberg | Getty Images

U.S. airline stocks Tuesday hit their highest prices since mid-June, but the rally, led by more customers returning to air travel and hopes for more government aid, cooled along with the broader market.

Delta Air Lines and United Airlines hit their highest prices since June 19. American Airlines topped its highest share price since June 22 and Southwest Airlines rose to the highest since June 16. The broader S&P 500 was up for most of the session, but slipped in late-afternoon trading.

Airline shares have had a strong start to the week after federal data showed more people passing through U.S. airports. On Sunday alone, the Transportation Security Administration screened 831,789 people, the most since March 17.

"We continue to believe there is coronavirus fatigue with some now looking to get back to normal life," wrote Cowen airline analyst Helane Becker on Tuesday. "We expect to see TSA throughput trend higher this week probably helped in part by college students returning to their schools."

Despite the uptick in travel, those numbers are down by about 70% from a year ago, showing airlines still have a way to go before returning to normal demand levels for the peak summer season.

Political support has also grown for $25 billion in additional federal support for airline payrolls, helping lift airlines' stock prices. The aid largely depends on whether lawmakers and the White House reach a deal for a broader coronavirus stimulus package.

Even with the recent rally, airlines' shares are down sharply this year. Delta is down 49% year-to-date, United has lost 58% and American is down 52% since the end of last year. Southwest is down 35% since Dec. 31, less than the others since it has a U.S.-focused network, unlike its larger competitors who have suffered from the pandemic's impact on international travel.