Will the Prolonged Government Shutdown Hamper Airlines' Q4 Results?

Core Insights - The longest federal government shutdown in U.S. history lasted 43 days, causing significant financial stress for federal workers and disruptions in various sectors, particularly the airline industry [1][2] Airline Industry Impact - The airline industry faced severe challenges during the shutdown, including multiple flight cancellations, staffing shortages, and reduced air traffic control operations due to unpaid air traffic controllers [2] - The Federal Aviation Administration (FAA) announced a reduction in flight capacity at 40 major U.S. airports during the shutdown [2] Company-Specific Updates Delta Air Lines - Delta anticipates a pre-tax profitability reduction of nearly $200 million, or about 25 cents per share, for the December quarter due to decreased travel demand in November caused by the shutdown [5] - Despite the challenges, demand for travel has rebounded, with strong trends continuing into early 2026 [6] Southwest Airlines - Southwest Airlines revised its full-year 2025 EBIT guidance down to approximately $500 million, a decrease from the previous range of $600-$800 million, due to lower revenues from the shutdown and higher fuel prices [7] - Bookings have returned to previous expectations following the temporary decline in demand [8] Alaska Air Group - Alaska Air Group expects a negative impact of approximately 55-60 cents per share for the fourth quarter, attributed to an IT outage, shutdown-related losses, and increased fuel costs [9] - The company has adjusted its fourth-quarter EPS forecast to around 10 cents per share, down from a prior estimate of 40 cents per share [10] - The FAA-mandated flight reductions during the shutdown resulted in nearly 600 cancellations, affecting about 40,000 passengers, with anticipated earnings impact of around 15 cents for the fourth quarter [13] Industry Performance - The Zacks Airline industry has seen a 10.7% increase in the past month, outperforming the broader Zacks Transportation sector's 5.4% growth and the 1.2% rise of the Zacks S&P 500 Composite [14]