Airline Stocks Face Turbulence. Why a Holiday Travel Boost Is Vital to Save 2025 Gains.

The impact of the government shutdown threatens to hurt airline stocks, unless holiday travel can save the day. (Mario Tama/Getty Images)

Key Points

• Airline stocks have recovered in 2025, with the JETS ETF up 3.6% and 53% off its April low, but face new challenges.
• The sector needs a strong holiday travel period to offset the negative impacts of a government shutdown and maintain gains.
• Air traffic throughput fell 1.8% year over year in the first 20 days of November, raising concerns for December’s outlook.

Airline stocks have overcome severe turbulence in 2025 to fly into positive territory. But there is more trouble ahead and the sector needs a strong holiday travel period to hold on to its gains.

The sector has recovered well from its April slump—due to President Donald Trump’s tariffs announcements—but the potential impacts of the government shutdown, likely to be revealed in airlines’ guidance updates in the coming weeks, threatens the rally.

The period between Thanksgiving and the end of the year has historically been a tricky one for airline stocks—at least before the record-breaking holiday seasons of 2023 and 2024.

The Global JETS exchange-traded fund, which tracks the performance of airlines, fell over the period for five consecutive years between 2018 and 2022—tumbling an average 4.8%. Part of that was marred by the Covid-19 pandemic, though, and surging holiday travel in the past two years has helped reverse the trend.

The JETS ETF jumped 14% over the holiday season in 2023 and 3.5% last year, according to Dow Jones Market Data.

Dec. 1 last year set a record for U.S. air travel as 3.09 million passengers were screened by Transportation Security Administration officials at airports across the country. The record was broken this summer with 3.1 million passengers on Jun. 22.

This year looks solid up to now—Friday Nov. 21 is the busiest day so far with 2.8 million passengers being screened, according to TSA data. But the Sunday after Thanksgiving will be the day to watch to see if the record can be broken again.

“December quarter revenue is typically dictated by the strength of corporate travel in October and holiday travel around Thanksgiving and late December,” TD Cowen analyst Tom Fitzgerald wrote in a note Saturday.

A holiday travel boost to revenue is likely to be even more important this year following the impact of the government shutdown. The Federal Aviation Administration ordered a staggered reduction in flights at the start of November as the funding lapse began to take its toll on air-traffic controllers.

It means the sector faces a battle to hold on to the gains it has fought so hard for in 2025. Airline stocks tumbled in March and early April after President Donald Trump unveiled tariff measures but have recovered well since— Delta Air Lines, United Airlines, and Southwest Airlines are all up between 4% and 6% this year, while the JETS ETF is up 3.6% and now 53% off its 52-week low in April.

“We expect airlines to update earnings guidance over the next couple of weeks to reflect negative impacts from government shutdown on travel sentiment,” Raymond James analyst Savanthi Syth said in a note Tuesday. She added that her checks indicated that while passengers were undeterred in the early days of the shutdown, travel demand started to be hit in November.

TD Cowen’s Fitzgerald noted that air traffic throughput has fallen 1.8% year over year in the first 20 days of November. He added that he had hoped for more of a bounce back in traffic after the FAA’s mandated cuts were lifted.

“We will be monitoring traffic next week and remain optimistic that there is sufficient time for the December holiday season to be salvaged,” he added.

But he, too, said investors are braced for negative revisions in December. Perhaps, only a strong holiday travel period can save the airline sector’s yearly gains in the final weeks of the year.

Write to Callum Keown at callum.keown@dowjones.com