AAL, UAL, DAL: Airline Stocks Flat as U.S. Ends Shutdown-Era Flight Cuts — What’s Happening?

Shares of major U.S. commercial airlines trended near the flatline during early trading on Monday, just before the aviation authorities’ mandated flight cut is scheduled to end by 6:00 a.m. ET.

As of 5:46 a.m. EDT, the shares of American Airlines (AAL), United Airlines Holdings (UAL), and Delta Air Lines (DAL) all rose marginally by about half a percentage point.

U.S. Lifts Flight Restrictions

During the height of the U.S. federal government shutdown, the U.S. Federal Aviation Administration (FAA) rolled out a phased flight reduction plan. The plan required flights at about 40 major airports across the country to be reduced over several days by 4%, then 5% and 6%, with plans to take it to as high as 10%.

The FAA issued the plan because a shortage of air traffic controllers — who were not being paid amid the shutdown — resulted in thousands of delayed flights and several cancellations. However, the 43 days of shutdown — which emerged as the longest in U.S. history — ended on November 12th.

The end of the shutdown helped to assuage the staff shortage situation as air traffic controllers began to return to their duties. Bryan Bedford, the FAA’s administrator, also cited improving staffing conditions as a reason for the decision to back down on the mandated cuts.

On Friday, the aviation authorities had trimmed the required cuts to 3%, down from 6%, following the reopening of the U.S. federal government. However, airlines seemed not to have followed the directive to the letter.

Why Are Airline Stocks Trading Flat?

According to the analytics company Cirium, only about 0.25% of flights were canceled at the stated major airports. The FAA has said that it is “reviewing and assessing enforcement options.” This appears to be the reason airline stocks are having no reaction to the cuts.

During the shutdown, although airline stocks remained largely resilient, the stocks dropped after the FAA rolled out plans to cut travel by as much as 10%.

Another pointer is that flight cancellations and delays have already dropped significantly.

On November 10 — two days before the government shutdown ended — over 1,400 flights within, into, or out of the U.S. were canceled, with 788 delayed, according to flight tracking and data platform FlightAware. However, the figures have now dropped to a trickle, with 29 canceled and 397 delayed, as of the early hours of Monday.

What Are the Best Airline Stocks to Buy?

Using the TipRanks Stock Comparison tool, investors can compare how the aforementioned airline stocks and others are performing and decide which to buy. Kindly refer to the graphics below.

Read more about these airline stocks here.