Airline stocks have outperformed the broader market in February, driven by strong performance among domestic carriers, Bank of America’s analysts said in a Tuesday note.
These equities gained 9.9% last month, roughly double the S&P 500’s return of around 5%.
“This follows a lackluster January for the group at -0.8% compared to the S&P 500’s +1.6%, but year-to-date, airline stocks have gained +9.0% compared to the S&P 500’s +6.8%,” analysts noted.
In 2024, there has been a shift in the stock market, with companies that lagged in 2023 now leading in performance.
Frontier Group Holdings (ULCC), Southwest Airlines Co. (NYSE:LUV), JetBlue Airways Corp. (NASDAQ:JBLU), and American Airlines Group Inc. (NASDAQ:AAL) have all seen their stock prices increase by over 10%.
Conversely, Delta Air Lines Inc. (NYSE:DAL), Alaska Air Group Inc. (NYSE:ALK), and Air Canada (ACDVF) have not performed as well compared to the rest.
The February stock performance was largely influenced by positive adjustments in stock multiples, which came as a result of bullish commentary about demand during the earnings and conference season.
Consequently, domestic carriers ULCC, LUV, and JBLU experienced the most significant gains from these multiple revisions, with an average increase of +5.0% from January. In comparison, the multiples of network carriers rose by +2.8% against January figures.
Looking at earnings, the EBITDAR estimates for 2024 saw a +1.4% increase in February and have risen by +5.7% since the start of the year.