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Airline Stocks Descend as Omicron Keeps Workers at Home

American, Delta, United and Southwest slid 2%, and JetBlue dipped 1%. The omicron Covid variant has led to worker shortages.
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Airline stocks fell Monday, with thousands of flights canceled in recent days, as the spread of the omicron Covid variant has kept airline workers at home.

More than 2,000 U.S. flights have been dropped since Christmas eve, though the number has dropped to more than 700 Monday from 1,500 Sunday, CNBC reports. Thousands of flights have been canceled around the world over the Christmas holiday weekend with 782 U.S. flights dropped on Monday along with a total of 2,267 globally, according to flight tracker FlightAware.

Workers Get Covid, Flights Get Canceled

The airlines have been canceling flights because they don't have enough workers to crew them because of people testing positive for Covid due to the fast-spreading omicron variant.

Airlines for America, a trade association that represents Southwest (LUV) - Get Southwest Airlines Co. Report, American (AAL) - Get American Airlines Group, Inc. Report, Delta (DAL) - Get Delta Air Lines, Inc. Report, United (UAL) - Get United Airlines Holdings, Inc. Report, and others warned the Centers for Disease Control (CDC) that its Covid guidelines could lead to labor shortages in a letter sent Dec, 23. The association asked for Covifd quarantine time from 10 to 5 days for vaccinated airline employees who have asymptomatic "breakthrough Covid infections.

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Delta Could Fly High

Morningstar analyst Burkett Huey puts fair value for Delta at $54.50.

“Delta is the highest-quality legacy carrier because it has been able to attract high-yielding business travelers through its product segmentation and credit card partnerships, primarily with American Express,” he wrote in October.

“Delta’s five-cabin segmentation strategy allows high-spending travelers to purchase premium options when they are able to. Frequently, business travelers use miles from a cobranded credit card to upgrade flights when their company is unwilling to pay a premium price.

“American Express pays top dollar for the miles given to these business travelers, as Delta-cobranded cards alone account for about a fifth of American Express’ (AXP) - Get American Express Company Report loan book. We’re confident that Delta can continue expanding this higher-margin business after the pandemic.

To be sure, “In the leisure market, we expect Delta will continue to receive pressure from low-cost carriers. While we believe that Delta’s basic economy offering effectively serves the leisure market, we don’t expect the firm to thrive in this segment,” Huey said.