A JetBlue flight at Ronald Reagan Washington National Airport in Arlington, Virginia on March 9, 2023.
Stephanie Reynolds | AFP | Getty Images
Airline shares fell on Wednesday as the market fell sharply amid concerns about the stability of some banks and new data showing a slowdown in consumer spending.
The NYSE Arca Airline Index, which covers mostly U.S. carriers, was down about 6% Wednesday afternoon, on track for its biggest one-day decline since last June. It has surpassed the drop S&P 500.
At a JPMorgan industry conference on Tuesday, airline executives said they expect strong demand and profits in 2023 despite higher costs. In the past year, consumer appetite for air travel has increased and higher fares have boosted airline profits.
But carriers have also focused on near-term problems, such as rising fuel and labor costs. United Airlines on Monday forecast a first-quarter loss from a possible new pilot contract and lower-than-expected demand earlier this year, a slow period for traditional travel.
Some executives said profitable business travel is changing due to hybrid work models that allow clients to mix business travel with leisure instead of traditional schedules.
“I think business travel has changed,” JetBlue Airways CEO Robin Hayes told the conference. “The day trips where you get up at 6 in the morning, come back at 8 in the evening … you don’t do that anymore.”
Hayes said this represents a change for the network.
“We came up with 15 Boston-LaGuardia because we thought it was a great idea. This is not the case,” he said. “And now it will be nine or 10 by the end of the year.”
Delta Air Lines CEO Ed Bastian said corporate travel has recovered to more than 80% of pre-pandemic levels.
“I tell a lot of my CEO friends in and out of the industry, I know where your employees are. “They may not be in the office, but you can find them on my planes,” he said at the conference. “This is due to a new way of working, a new hybrid, a new mobility. And I don’t think that will change.”