Thanksgiving Sunday Sets New U.S. Air Travel Record. Why Airline Stocks Are Falling.

The Sunday after Thanksgiving was hit by flight delays and cancellations across the U.S. (Photograph by Scott Olson/Getty Images)

Airline stocks were falling to start the week even as Sunday set a new record for U.S. air travel. Delays and cancellations may be holding the sector back.

More than 3.1 million passengers were screened at U.S. airports on Sunday, according to Transportation Security Administration data. That surpasses the previous record set on June 22 this year.

However, the busiest travel day in U.S. aviation history was marred by wintry weather disruption at airports across the country. That’s potentially why airline stocks aren’t enjoying gains Monday. Southwest Airlines , United Airlines , American Airlines and Delta Air Lines were all down in early trading.

The disruption is not a disaster for airline stocks—cancellations were largely kept under control and Sunday’s record day bodes well for the Christmas holiday period.

With the government shutdown impacting demand at the start of the quarter, the sector needs strong Thanksgiving and Christmas travel to avoid further turbulence.

“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 last month.

More than 12,500 flights within, into, or out of the U.S. were delayed and 1,027 were canceled Sunday, according to data from flight-tracker FlightAware. Chicago O’Hare International Airport was the worst-hit with 981 flights delayed—64% of those scheduled to depart the airport. Around a third of flights into and out of New York’s JFK airport were delayed.

The picture wasn’t as bad early Monday with around 2,000 flights delayed and just 227 canceled as of 10 a.m. Eastern time. Delta Air Lines, United Airlines and American Airlines all had around 4% of flights delayed.

Weather wasn’t the only problem airlines faced over the weekend. Carriers were scrambling to update software on thousands of Airbus planes after the jet maker recalled about 6,000 A320 aircraft on Friday, citing solar radiation’s potential to interrupt flight controls.

American Airlines and Delta Air Lines told Barron’s on Saturday that they had completed the work and expected no operational issues, while United Airlines said there wouldn’t be an impact to operations on Saturday.

The airline sector has fought hard to get back into positive territory for the year but faces a battle to hold on to those gains. More days like Sunday won’t help.

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