Will Northeast Storm Cato Slow Down Airline's Dream Run?

The U.S. airline industry has been flying high over the past few quarters on the back of lower fuel prices and increased air travel. Despite the Ebola scare and geo-political tensions in Eastern Europe and the Middle East, the industry continues to report record profit. However, the industry might run into some turbulence due to the concern regarding the Northeast snowstorm Cato, which may disrupt air travels during Thanksgiving holiday.

Per news sources, 125 flights are likely to be cancelled at Chicago’s O’Hare International Airport due to heavy snow fall. Also, nearly 23 northeastern airports were forced to reschedule its flights due to the storm.

Airlines for America (A4A) predict a 1.5% increase in the number of flyers during this Thanksgiving holiday season. According to A4A, 24.6 million passengers will travel via U.S. airlines between Nov 21 and Dec 2. Hence, Cato will significantly affect the travel plans of a huge number of fliers this holiday season.

Even The Weather Channel has warned against traveling on Wednesday — the day before Thanksgiving — from the mid-Atlantic to New England. As a result, most airline companies like Delta Air Lines Inc. (DAL), JetBlue and Southwest Airlines Co. (LUV) are offering flexibility to passengers, while American Airlines Group (AAL) will waive re-booking charges for fliers scheduled to fly on Nov 26 to, from or through 19 Northeastern cities.

A similar waiver has been announced by United Continental Holdings Inc. (UAL) which includes 23 cities between Washington, D.C. and the north to Maine. The company had also cancelled 1,200 flights due to winter storms last year.

American Airlines sports a Zacks Rank #1 (Strong Buy), while United Continental has a Zacks Rank #2 (Buy).

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