We already heard, earlier today, from some airline stocks that were seeing a decline. But as it turns out, the decline goes deeper into the broader industry than some might expect. It wasn’t just JetBlue (NASDAQ:JBLU) and American Airlines (NASDAQ:AAL), it’s Southwest (NYSE:LUV) and several others as well who are turning downward into Thursday afternoon’s trading.
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Southwest started sinking after it noted that the deadly combination of declining per-unit revenue and higher costs was likely to continue. Its earnings report featured several smaller disasters that, combined, made up a much worse scenario. There was the 10% drop in net income, with revenue per available seat trailing off 8.3%. There was also $300 million in breakage, though that relates to flight credits that were issued back during the pandemic that needed to be used before they expired. That problem likely won’t be such a problem down the line, but there were still plenty of troubles to go around.
Worse, a negative halo effect seemed to kick in, sending several other airlines into open decline. Some much more so than others; Southwest lost almost 9.5% in Thursday afternoon’s trading, while Hawaiian Holdings (NASDAQ:HA) lost over 7%. Frontier Group (NASDAQ:ULCC) slid just over 5%, and Spirit Airlines (NYSE:SAVE) dropped about 3.6%. Allegiant Travel (NASDAQ:ALGT) got off the lightest, if only just, coming in at 3.2% down at one point.
While each airline didn’t come off well, some still represent stronger potential wins than others. For instance, Frontier Group, the third-hardest hit in today’s action, is considered a Strong Buy by analysts with the best upside potential: 63.42% thanks to its average price target of $14.83. However, the second-lightest hit, Spirit Airlines, also has a 17.31% downside risk with an average price target of $15. Analysts also consider it a Moderate Sell.
