Travel ETFs Get A Lift From Higher Revenue Estimates

Southwest Airlines Co. and JetBlue Airways Corp. say consumers are filling planes and paying higher fares.

Travel-related ETFs are getting a lift Thursday after Southwest Airlines Co. and JetBlue Airways Corp. raised their second-quarter estimates ahead of what’s expected to be a busy summer travel season. 

Southwest raised revenue estimates to 12-15% in the second quarter of 2022 over revenues in the same quarter in 2019, which was the last quarter before COVID-19 stalled routine travel. The airline originally estimated an 8-12% increase between the two periods. JetBlue is now estimating as much as a 14-19% gain in revenue versus the second quarter of 2019, an increase of 2-3% from its first guidance. 

Both airlines said bookings are exceeding original expectations and are more than offsetting higher fuel prices. The brighter outlook also suggests consumers are willing to pay inflated costs to travel, counteracting fears generated by the misses in consumer staple names like Walmart Inc. and Target Inc. earlier this month. 

JetBlue stock rose 4.4% and Southwest stock rose 6.5% as of 1:30 p.m. ET Thursday, while the NYSE Arca Airline Index rose 5.83%. 

The focus on airline demand sent the U.S. Global Jets ETF (JETS) up 5.77%, and beneficiaries of travel gained with it. The Defiance Hotel, Airline & Cruise ETF (CRUZ) gained 6.4%, the SonicShares Airlines, Hotels & Cruise Lines ETF (TRYP) added just shy of 5% and the AdvisorShares Hotel ETF (BEDZ) gained 4.7%. 

However, every travel-related ETF is negative for the year, broadly following the downward trend of the S&P 500 as sentiment began to sour in late February. 

Contact Dan Mika at [email protected], and follow him on Twitter