U.S.-based airline stocks are tumbling in early trading after the U.S. government ordered a 10% reduction in flights at major airports amid the ongoing shutdown. The move has sparked concern among investors, as airlines could lose revenue with flights cut across the country. Notably, United Airlines Holdings (UAL) is down 1.2% in pre-market trading, while American Airlines Group (AAL) and Delta Air Lines (DAL) are down 0.97% and 0.50%, respectively.
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For context, the U.S. federal government has been in shutdown since October 1, as lawmakers clash over funding for the 2026 fiscal year. During this period, the shutdown has disrupted thousands of flights across the U.S., as air traffic controllers are not being paid, leading to delays and cancellations at major airports.
US Orders 10% Flight Cuts at 40 Major Airports
Until now, airline stocks had remained relatively resilient despite the chaos caused by the government shutdown. That run seems to be over. On Wednesday, U.S. Transportation Secretary Sean Duffy announced that flight capacity at 40 major U.S. airports will be cut by 10% starting Friday morning. Duffy added that the cut is due to air traffic control safety concerns amid the shutdown’s 36th day.
Citing industry sources, Reuters reported that the FAA (Federal Aviation Administration) outlined a phased reduction in flight capacity at the affected airports: 4% starting Friday, 5% on Saturday, 6% on Sunday, and reaching 10% next week. The FAA also said that international flights would be exempt from these cuts.
While the government did not specify the 40 airports affected, the reductions are expected to impact the 30 busiest airports, including major hubs serving New York City, Washington, D.C., Chicago, Atlanta, Los Angeles, and Dallas. According to aviation analytics firm Cirium, the cuts could eliminate up to 1,800 flights and more than 268,000 airline seats.
The Blame Game Goes On
Both Democrats and Republicans continue to accuse each other of being behind the longest shutdown in U.S. history. The Trump administration has used the threat of major aviation disruptions to pressure Democrats into ending the shutdown, while Democrats argue that Republicans are to blame for refusing to negotiate over key health care subsidies.
Meanwhile, Duffy assured that the cuts could be reversed if Democrats agreed to reopen the government.
Airlines React to Shutdown
United Airlines CEO Scott Kirby assured staff and customers that long-haul international and hub-to-hub flights will continue normally, while the cuts will mostly target regional routes. He also said any customer can get a refund if they choose not to travel, even if their flight isn’t directly affected.
American Airlines expressed a similar stance, noting that most customers are expected to experience minimal disruption.
Overall, airlines say the shutdown hasn’t seriously impacted their operations yet, but warn that bookings could fall if it continues.
AAL, DAL, UAL: Which Airline Stock Offers Higher Upside, According to Analysts?
Using TipRanks’ Stock Comparison Tool, we have compared airline stocks to see which stock offers higher upside to investors. Below is a screenshot for reference.
