ULCC

Record Travel Numbers: Nearly 82 million Americans are expected to travel for Thanksgiving, marking the highest volume ever recorded, surpassing last year's 80.22 million and pre-pandemic levels.

Air Travel Surge: Approximately 6 million people are projected to fly, reflecting a 15% increase from 2019, despite high airfares averaging $700 for a domestic round trip.

Road Travel Dominance: About 73 million travelers, nearly 90% of the total, will travel by road, with a notable increase in car rentals expected, particularly on November 26.

Popular Destinations: Florida leads in domestic flight bookings, while international travelers are favoring destinations in Europe, the Caribbean, and Australia, driven by warm weather and holiday attractions.

U.S. Airline Sector Resilience: Bank of America Securities maintains that the U.S. airline industry is fundamentally strong despite temporary disruptions from the government shutdown, with core demand drivers like premium-cabin strength and corporate travel recovery supporting major carriers.

Impact of Government Shutdown: The shutdown has caused short-term operational issues, including flight cancellations and delays, but is viewed as a one-off shock rather than a decline in travel demand, with airlines managing capacity to maintain pricing power.

Airline-Specific Adjustments: American Airlines and Delta Air Lines have reduced scheduled flights at major U.S. airports due to air-traffic control staff shortages linked to the shutdown, complying with FAA directives and offering flexible options to customers.

Market Performance and Outlook: Despite recent seasonal weaknesses, airline stocks have rebounded in November, outperforming the S&P 500, and BofA expects earnings pressure from the shutdown to diminish quickly as airlines strategically manage capacity and rebook travelers.