The easing travel restrictions amid widespread vaccinations and lower COVID infection rates are leading to a surge in demand for air travel.
During the Q1 conference call, United Airlines (NASDAQ: UAL) CEO Scott Kirby stated, “The demand environment is the strongest it’s been in my 30 years in the industry.” Meanwhile, Southwest Airlines (NYSE: LUV) CEO, Bob Jordan, expects 2022 to be a profitable year due to continued strong bookings.
An improving operating environment and favorable management commentary indicate that these airline companies could deliver stellar financial performances in the coming quarters. However, recessionary fears and cost headwinds could play spoilsport.
Amid the uncertainty, let’s use TipRanks’ new Website Traffic screener to find the best possible solutions. The screener helps investors track consumer behavior, analyze the changes, and gauge the impact on their financials and stock price.
Website Traffic
TipRanks’ Website Traffic tool hints that consumer spending has shifted towards air travel, which is stimulating demand.
Per the tool, the number of visits to united.com is up 11.1% month-over-month in May. Year-to-date, the website traffic has grown 22.9% compared to last year’s period. Further, compared to Q1, website traffic is trending 18.7% higher in Q2 so far, which is encouraging.
Meanwhile, for Southwest Airlines, the number of visits to southwest.com grew about 15% month-over-month in May. Further, on a year-to-date basis, the website traffic has increased 22.3% compared to last year. Moreover, website traffic is up 15.4% so far in Q2 as compared to Q1.
Bottom Line
The positive management commentary and improving website traffic indicate that better days are ahead for these airline companies and their shareholders.
Speaking at Jefferies’ annual Airlines Summit, Ankit Gupta, United Airlines’ SVP (Senior Vice President) of Domestic Planning and United Express, stated, “The demand environment remains strong into the summer with bookings and fares consistently higher over the last 3 mos [months] despite recessionary fears across the broader economy.”
Gupta added that UAL keeps a tab on several data points to predict consumer spending patterns and highlighted that UAL “has not seen any softening over the recent weeks despite volatility in the financial markets.” Further, he pointed out that UAL has witnessed an increase in international travel searches on its platform post easing of testing requirements.
UAL stock sports a Moderate Buy consensus rating o TipRanks based on 10 Buy, six Hold, and one Sell recommendations. Moreover, the average United Airlines price target of $59.66 implies 67.2% upside potential.
As for LUV, its EVP and CFO, Tammy Romo, reiterated that momentum remains strong in Q2. He added, “The company is not detecting any pressure on bookings, particularly with leisure demand and no signs of a slowdown.”
Romo is confident that cost headwinds will return to normal with fuel hedging and capacity growth.
LUV stock has received eight Buy, five Hold, and one Sell recommendations for a Moderate Buy consensus rating. Further, the average Southwest Airlines price target of $53.79 implies 48.7% upside potential.
