Airlines are being hurt by having too much capacity: Analyst

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Airlines are being hurt by having too much capacity: Analyst

Shares of ******* Airlines (UAL) are sliding in after-hours trading after the company posted mixed second quarter results. Third Bridge global sector lead for industrials, materials, and energy Peter McNally joins Market Domination Overtime to break down the airliner’s earnings report and some of the headwinds facing the overall industry.

“In the short term there really weren’t too many surprises. I mean, the company reiterated its Q2 about six weeks ago, and they did OK, but… most of the market has gotten this heads up now that the airline industry is softening. There’s just too much capacity right now and we’re at a peak demand season. And it’s weighing on the revenues

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,” McNally explains. He adds, “it gets more interesting for ******* longer term,” as capital expenditures seem lower year-over-year and Boeing’s (BA) deliveries slow. He notes that *******’s future plans depend on getting new planes from Boeing, and he’s keeping a watchful eye on how those plans get pushed.

McNally says that there has been a ***** in post-COVID travel, explaining, “a lot of capacity was added by all the airlines, particularly in the domestic market, which opened up first and everyone headed to Florida, Texas, California… And there were a lot of planes around at that point that came back in service. So we’re on the tail end of that now.” He notes that as summer bookings cool down, ******* is poised to enter a “very soft ******* in the fall,” so the focus will most likely turn to its fourth quarter. He adds that Boeing delays and competition from budget carriers are impacting the overall airline industry: “It’s the front of the plane where the major carriers recognize that there’s an opportunity and they’re chasing after it… people recognize these are your most profitable travelers and everyone wants to go after them.”

For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.

This post was written by Melanie Riehl

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#Airlines #hurt #capacity #Analyst

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