Airline stocks take off after American and Southwest raise targets

A day after JetBlue Airways (JBLU-2.21%) told investors that the end of the year was looking rather ascendant, a pair of its peers are doing the same. Stocks across the airline industry are leading the S&P 500 as American Airlines and Southwest Airlines both announced Thursday that they are raising their guidance for the end of 2024.

“The pricing and revenue environment has continued to improve since the Company’s prior fourth-quarter guidance issued on October 24, 2024,” American said in its update. “The Company now expects fourth-quarter TRASM to be approximately flat to up 1% versus the same period in 2023.” (It doesn’t hurt that American’s new loyalty credit card deal will send a bit more money its way.)

Southwest is likewise excited about how its fourth quarter is shaping up.

“The Company now expects fourth quarter 2024 unit revenues to increase in the range of 5.5 percent to 7.0 percent on a year-over-year basis, with capacity down approximately 4 percent, also on a year-over-year basis,” the company said. “The strong year-over-year unit revenue growth is driven by resilient travel demand along with the realization of benefits from the Company’s execution of tactical actions.”

All those words mean that the airlines are flying less and expecting to make more money because of it. When executives from the field began complaining about a “capacity crisis” of not-full-enough planes, this was the solution they came up with to address that.

The announcements help bring years of difficulty for both airlines to close with some good news. American Airlines (AAL+16.97%) has been cleaning up a self-inflicted mess that came when the company tried to bring more of its business-class travel in-house; the change led to the dismissal of its former chief commercial officer. Southwest Airlines (LUV+2.05%) only recently settled with a hedge fund investor who wanted a major corproate shakeup to make up for a rough patch of ho-hum business where changes like eliminating its signature open-seating policy were seen as not good enough.

United Airlines (UAL+3.20%) told investors earlier this year that they were able to suss out this trend before its competitors and get a jump on cutting supply early; JetBlue Airways just informed its staff that it would be cutting a number of routes in order to help push up fares and profits.

Wall Street is feeling as excited about these developments as the airlines. American shares were up 16%; Southwest shares were up 4%. What’s good for those two geese appears to good for the gander as well: United Airlines shares were up 5%, and Delta Air Lines (DAL+2.29%) shares were up as well.