Callum Keown
As far as the Trump trade goes, the airline sector may be going under the radar.
Airline stocks have rallied since last week's presidential election, but there could be more to come as Donald Trump takes office.
The NYSE Arca Airline Index, which tracks the performance of airlines, has jumped 10% since Nov. 5, the day before it became clear the former president will return to the White House. The S&P 500 is up 3.8% over the same period.
Trump is expected to ease regulation on the sector, in particularly contrast to the Biden's administration's tough stance.
The sector's best-performer over the past week is ultra-low-cost carrier Spirit Airlines. That's unsurprising given that the stock has been battered this year after a U.S. federal judge blocked the airline's proposed merger with JetBlue Airways in January following a Justice Department lawsuit.
Spirit needs a buyer, and is reportedly in merger talks with Frontier Airlines, owned by Frontier Group Holdings. A Trump presidency would likely make the process easier.
Under Biden, the Justice Department also successfully unwound an alliance between American Airlines Group and JetBlue in the New York and Boston areas last year. A federal judge ruled the partnership "substantially diminishes competition" in the domestic air-travel market.
Aside from easing regulation, Trump's policy agenda could also help prolong the travel boom. Melius Research analyst Conor Cunningham said that potentially pro-business policies under Trump could "jolt forward" corporate travel activity in 2025, while the prospect of consumer-tax breaks may drive growth in international and premium travel.
The dollar has also strengthened following the election, and a stronger greenback makes overseas travel more attractive.
American Airlines, Delta Air Lines and United Airlines Holdings -- three U.S. airlines more exposed to international travel -- have climbed 7%, 9%, and 12% respectively since last week's election.
It's not just investors welcoming the positive impact of Trump's second term on the airline sector.
Delta CEO Ed Bastian said the President-elect was helpful to the carrier in his first term, and that he expects Trump's second to be "positive" for the airline, in an interview with The Atlanta Journal-Constitution. Bastian added that Trump was a "strong supporter of U.S. airlines and U.S. jobs."
The postelection gains have been strong, and 2025 could be better than the market expects for U.S. airlines.
Write to Callum Keown at callum.keown@dowjones.com
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November 12, 2024 09:03 ET (14:03 GMT)
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