United Confirms Robust Air Travel, Benefiting These 2 Portfolio Holdings
Air travel drives spending in other services, which also benefits these holdings.
You're reading 0 of 1 free page.
Register to read more or Unlock Pro — 50% Off Ends Soon
When Delta Air Lines DAL reported its December-quarter results earlier this month, it shared that as it closed out 2024 it saw an acceleration in air travel demand from corporates and consumers. Management forecasted its top line to grow 7%-9% as that strength continues in the current quarter. That led us to scoop up more shares of American Express AXP, a decision reaffirmed by what we heard from United Airlines UAL last night.
During its December quarter, United’s sales of its premium and basic economy seats were up 10% and 20%, year-on-year, respectively, and its corporate bookings rose 7%. Viewed from a domestic vs. international perspective, United’s domestic business increased 5% during the quarter while international revenue climbed 8.7%. Much like Delta, United sees that strength continuing on both the domestic and international front in the current quarter.
We’ll get more color during the company’s 10:30 a.m. ET earnings call Wednesday morning. Paired with those earlier Delta comments, they suggest we should hear similar ones from American Airlines AAL and Alaska Air ALK Thursday morning. As we digest all of these comments, let’s remember that when folks travel by air there tends to be corresponding spending on hotel/accommodations, food, and other travel-related services.
We see that overall activity supporting positive spending comments from American Express when it reports Friday morning. As we digest those spending comments, reported membership growth, and average fee per card, we’ll revisit our AXP price target as needed.
The same line of travel-related thinking follows for our Mastercard MA position as well.
At the time of publication, TheStreet Pro Portfolio was long AXP and MA.
