Airline Stocks Soared During the Last Government Shutdown. Why This Time Is Different.

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The sector's shares are on an awful run and turbulence in Congress is the last thing the industry needs right now.

Airline stocks are on an awful run and a government shutdown is the last thing the industry needs right now.

But history suggests it may not be all that bad, at least for the stocks. Shares in major U.S. airlines rose an average 9.4% during the last federal government shutdown, which lasted a record 35 days from Dec. 22, 2018 to Jan. 25, 2019. Southwest Airlines was the best performer, climbing 19.6%, according to Dow Jones Market Data. In fact, only one carrier— Delta Air Lines —fell over that period, slipping 3.5%.

The day before the government reopened, Southwest estimated a $10 to $15 million revenue hit from the shutdown in January 2019. It went on to report revenue of $5.1 billion in the first three months of the year, a record for the quarter. The rally during late 2018 into early 2019 coincided with a strong fourth-quarter earnings season as airlines surprised to the upside, played down the impact of the shutdown, and gave upbeat commentary on the year ahead.

 

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