The market may be edging higher today, but the same cannot be said for the travel sector which has been a sea of red on Friday.
The likes of Corporate Travel Management Ltd (ASX: CTD), Flight Centre Travel Group Ltd (ASX: FLT), Qantas Airways Limited (ASX: QAN), and Webjet Limited (ASX: WEB) have all tumbled lower and are underperforming the market.
Here's a summary of how they are performing today:
- The Corporate Travel Management share price is down 5%
- The Flight Centre share price is down 3%
- The Qantas share price is down 2%
- The Webjet share price is down 6%
Image source: Getty Images
Why are travel shares sinking today?
The catalyst for the weakness in the travel sector today has been the release of a couple of disappointing airline results on Wall Street last night.
Both American Airlines and United Airlines released their quarterly updates and disappointed the market.
While American Airlines delivered its first profit since the pandemic began during the second quarter, its earnings per share were a touch short of consensus estimates.
In addition, capacity concerns overshadowed its return to profit and led to its shares descending deep into the red. Management advised that it expects flight capacity to be between 8% and 10% lower in the third quarter due to higher fuel and labour expenses.
It was a similar story over at United Airlines, which has cut plans to grow flight capacity because of ongoing macroeconomic challenges. In addition, the airline operator's second-quarter earnings per share fell short of expectations by a wider margin.
This has sparked fears that the travel market recovery may take longer than hoped, which could weigh on the earnings of Flight Centre, Webjet, and other ASX travel shares.
