As the government shutdown – now in day 38 – continues to drag on and with no immediate end in sight, Transportation Secretary Sean Duffy warned air travelers that cuts to U.S. flights could reach 20%.
In an effort to reduce the strain on the diminished number of air traffic controllers at the nation’s airports, all of whom are working without pay since the end of October, the FAA initiated a temporary 10% reduction in flights at 40 high-traffic airports.
Duffy warned that at just a 10% reduction, the airlines “are going to lose millions of dollars because of this. It’s challenging for them to take down flights,” Duffy said on Fox Business.
But should the shutdown continue, Duffy warns that the number of flight reductions could double.
According to FlightAware, which tracks flight delays and cancellations across airports around the globe, there have been 860 flights canceled within, into, or out of the U.S. today. While this does not separate flights that are being impacted solely by the FAA action, it compares to just 151 cancellations on Tuesday, 171 on Wednesday, and 202 cancellations on Thursday.
Still, even with a potential hit to their top line this quarter, airline stocks have shown resilience.
Shares of the major U.S. carriers — United Airlines (UAL), Delta Air Lines (DAL), American Airlines (AAL), JetBlue (JBLU), Alaska Air Group (ALK), and Southwest (LUV) — are all ending the week in the green.
And among the low cost/regional carriers – Frontier Group (ULCC), Sun Country Airlines (SNCY), Mesa Air Group (MESA), and Spirit Airlines (OTC:FLYYQ) – only Spirit is ending the week with a loss.