Omicron and Winter Weather Ground Thousands of Flights Across the U.S.

The airline industry is off to a rough start in the New Year, with thousands of flights getting canceled. On Monday, there were 3,225 flights canceled across the country as a winter storm hit the mid-Atlantic. In total, over 20,000 flights have been canceled since Christmas.

This scene is a stark contrast from Thanksgiving weekend when air travel hit its highest point since the beginning of the pandemic. With the recent bad weather and the emergence of the Omicron variant, many wonder if 2022 will be another tumultuous year for the airline industry.

Thousands of flights were canceled over the holidays

Over the holidays, flight cancellations disrupted the plans of tens of thousands of travelers. Southwest was forced to cancel 395 of its scheduled flights this week, and JetBlue Airways canceled 10% of its scheduled flights.

In total, JetBlue expects to cancel up to 1,300 flights through the month of January. The other airlines haven’t fared much better, with United, American, and Southwest all canceling flights this week.

Airlines blamed the cancellations on the surge of the Omicron variant and poor weather across the U.S. A spike in Omicron infections has left many airlines short-staffed, and a winter storm grounded many flights.

The airlines are dealing with these cancellations as best they can. Many airlines are offering increased pay to crews willing to take on extra flights. United Airlines offered triple pay to its pilots who are willing to fly during the month of January.

Airline stocks rally despite cancellations

Despite the rough start to the New Year, many investors were surprisingly optimistic about the airline industry. Airline stocks rallied this week, with American seeing its shares rise more than 4%, Delta gaining 3%, and United gaining 3.9%.

This week, Citi analyst Steve Trent acknowledged that the Omicron variant poses a “modest” risk. But he pointed out that the airline industry is in a very different position than it was in 2020, thanks to vaccines and the additional COVID treatments we have available.

In a note to investors, Trent wrote, “…higher vaccination rates and emerging anti-viral treatments are just some of the factors that could make negative, knee-jerk stock price reactions to the emergence of future variants look increasingly unreasonable.”

Other analysts were similarly upbeat — Conor Cunningham of MK Partners said Delta is his top pick for 2022. Trent named Frontier Airlines and Delta as his top picks.

The future may be positive for the airline industry long-term, but its recovery will likely be full of ups and downs. It’s unclear how much these cancellations will end up costing the airlines since Christmas and New Year’s was expected to be the busiest travel season of the year. Delta will release its quarterly earnings report on Jan. 13, so investors will know more then.