Reuters reports that U.S. airline investors are concerned about potential softening demand due to a shaky economy and rising costs despite a strong travel boom. Airline stocks face drops even with positive earnings reports, reflecting broader market apprehension.
While travel demand remains robust, allowing carriers to set higher fares, there are indications of airline pricing power peaking. Analysts point out the challenge of passing increasing operational costs onto consumers, especially with depleted pandemic savings and high interest rates impacting consumer spending. Airlines face higher costs due to rising fuel prices and labour bills. Disruptions like the Israel-Hamas war and delays in aircraft deliveries further complicate the situation.
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