The airline industry is grappling with multiple challenges, including severe weather events such as Hurricane Milton in Florida disrupting operations. Citi Managing Director Steve Trent joins to analyze airline stocks amid these headwinds. Trent explains that for airlines, every 1% decline in available seat mile growth translates to approximately a 2% drop in pre-tax earnings. He points out that discount airlines are "a lot more exposed" to hurricane risks, though he notes that "several of the airlines have significant metal in that market," referring to Florida where Hurricane Milton is expected to make landfall. According to Trent, discount carriers like Spirit (SAVE) have been losing market share to major network airlines such as Delta (DAL) and United (UAL) in the post-pandemic period. This shift is particularly challenging for budget airlines that lack "the revenue verticals you need" to offset the loss in seat miles.
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