Airline stocks soar after Donald Trump’s re-election

06 Nov 2024, 14:08 by Veronika Bondarenko · The Fresno Bee

While the last of the votes in battleground states like Michigan and Arizona are still being counted, Donald Trump has earned the 270 electoral votes it takes to defeat Democratic candidate Kamala Harris in the race for the Presidency, projecting him to recapture the office he lost in 2020.

With President Trump's re-election fueling discussion on how a second Trump term will affect everything from immigration and inflation to cryptocurrency, aviation stocks quickly responded to the news. Shares of the "big three" airlines were all up in pre-market trading on November 6.

Delta Air Lines (DAL) is indicated up 4.31% at $60.80, while United Airlines (UAL) is also up by nearly 5% at $83.91. American Airlines (AAL) , meanwhile, finished Nov. 5 at $80.03 but was up 4% in pre-market trading on Wednesday.

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Shares of low-cost airlines such as Spirit Airlines (SAVE) and Southwest Airlines (LUV) both began the day with similar spikes due to what many investors expect to be a laxer approach to regulation of the industry, such as when a federal judge blocked JetBlue (JBLU) 's attempt to purchase Spirit at the start of 2024.

Airline expert forecasts 'hands-off' regulation

"The return of the Trump Administration will likely usher in a more hands-off approach to regulation that will impact both passenger protections and mergers.," writes Matthew Klint of the Live And Let's Fly publication. "American Airlines is already exploring a fresh alliance with JetBlue and I expect we will see a full return of the Northeast Alliance with very little pushback from U.S. regulators."

Analysts also expect a rollback of some of the traveler protection victories secured by current Transportation Secretary Pete Buttigieg, including the law requiring airlines to offer passengers automatic refunds in the case of cancellations passed at the start of the month.

While some current protections will remain cemented in law, others may be taken up by an administration that has repeatedly talked about decreasing business regulation.

What a Trump victory means for the airline industry

"For airlines, which faced intense regulatory scrutiny over the past four years, Trump’s policies could ease pressure around deal-making," writes Skift Editor-In-Chief Sarah Kopit. "The Department of Justice's recent inquiry into competition in air travel may also fade under Trump's leadership, along with proposed rules requiring increased fee disclosures by airlines and hotels."

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Shares of other airlines, including JetBlue and Frontier (ULCC) saw similar gains in pre-market trading, while Alaska Airlines (ALK) went from $48.56 at close on Tuesday to $50.40 ahead of the opening bell.

Trump's victory and "America First" trading campaign is also projected to impact tariffs on materials used to make aircraft, including steel and aluminum to be raised for foreign imports by as much as 10% and nearly 65% for Chinese products.

"Trump's key economic policy is to levy major tariffs against key trade partners to the United States,” writes travel editor Nick Burgess. "This is a similar, albeit beefed-up, approach to what he did in his first term, which saw real purchasing power shrink among the American middle class. However, the travel industry was hit particularly hard by rising costs due to tariffs from 2017 to 2019, including the costs of furnishing the rooms."

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This story was originally published November 6, 2024, 6:08 AM.