Airline revenue is pressured in ‘off-trend’ calendar quirk

Bloomberg

Airlines are coping with a calendar quirk that’s prompting more fliers to book flights on either side of December, creating an air pocket in the last month of the year.
The US Thanksgiving holiday on November 24 was the earliest its been since 2018, prompting more travellers to take a return trip the same month — unlike in the past three years when some of that spilled into December. And because many people will be on holiday Monday, December 26, the day after Christmas, more fliers are delaying their trek back home until early January. As a result, fewer seats are being booked in December.
“Four additional off-peak days between Thanksgiving and Christmas, as well as Christmas timing incentivising January return travel” are behind the quirk, JPMorgan analysts Jamie Baker and Mark Streeter wrote in a research note to clients.
Investor anxiety over December booking trends have hurt airline stocks, even as Delta Air Lines Inc emphasized it’s seeing strong demand. An S&P 500 index of major US carries is down more than 7% this month.
Delta raised the midpoint of its fourth-quarter earnings guidance, based in part on particularly strong unit revenue in October and November, with an “off-trend” December linked to the timing of travel for Thanksgiving and Christmas. The carrier predicted the shift last quarter and factored it into guidance, but still trimmed the top end of its previous revenue outlook.
“The outlook is strong here as we end the year,” Delta Chief Financial Officer Dan Janki said in an interview with Bloomberg Television.
“We knew there was this unusual period between Thanksgiving and the holiday year-end season. It’s come in right as we expected.”
JetBlue Airways Corp also pointed to the calendar as one reason for warning revenue is trending below expectations. The carrier said that revenue from each seat flown a mile, a gauge of passenger traffic and fares, would be at the low end of its prior guidance of a 15% to 19% increase from 2019.
Its outlook for “very strong” close-in demand in December was less than forecast, JetBlue said, as the negative effect from the holiday travel timing was greater than expected.
The good news for airlines is that more post-Christmas travel in January is likely to be a tailwind for them in the opening weeks of the new year.