Behind The Numbers: Airline Stocks

Dataset

For this quick dive behind the numbers I wanted to take a look at the stock prices of U.S. airlines in 2020. I downloaded the historical stock information from the five largest U.S. airlines: American Airlines, Alaska Airlines , Delta Airlines, Southwest Airlines and United Airlines. The dataset includes information from all 253 days the stock market was open for trading in 2020.

Looking at the 2020 airline stock chart in full view we can observe a strong decrease in price in all airlines observed in the first quarter of the year.

All five companies saw their highest stock price for the year within the first 45 days. The airline industry is known for being brutally competitive under normal circumstances- but no airline company could have been prepared for the amount of drop-off in air travel and rise of uncertainty around COVID-19.

Highest stock prices of 2020

AAL    30.47
ALK    68.17
DAL    62.03
LUV    58.54
UAL    89.74

COVID-19 travels restrictions severely impacted air travel and it is apparent in the stock price data. We can see the March inflection point when the U.S. saw its first domestic COVID-19 travel restrictions and stay at home orders initiated.

As the days and weeks went on the respective stock prices continued to fall as the market experience record volatility. The airlines had to ground thousands of planes as they canceled thousands of flights. They would quickly fall danger of going bankrupt without government intervention. This narrative made the rounds in the media as the stock prices continued to fall.

Lowest stock prices of 2020.

AAL     9.04
ALK    23.56
DAL    19.19
LUV    23.87
UAL    19.92

No one is prepared to see their life saving, stock portfolio, or retirement fund fall 70% in 3 months.

Largest 2020 losses.

AAL -70%
ALK -65%
DAL -69%
LUV -59%
UAL -78%

There was much talk during 2020 about how the stock prices of the airline companies had not recovered as well as the broad market. This is evident when comparing them to the S&P 500.

No, surprise.

The airlines traded with a high degree of correlation in 2020.