American Airlines and Spirit Airlines warned higher costs will trim profits during the summer quarters. American also stated the newly negotiated pilot labor deal will also eat into profit margins. Frontier Airlines is seeing lower demand for newly booked flights as of late. “In recent weeks, sales have been trending below historical seasonal patterns” warned Frontier. We will be watching their Q3 earnings when reported in mid-October.
Inflation numbers came in higher than expected in August. The Consumer Price Index (CPI) rose 3.7% on an annual basis. The primary cause was a spike in gasoline prices during the month. Economists expect this spike in inflation to be temporary as we look for gasoline prices to come down. Supply and demand imbalances are still an issue even 3 years since the Covid-19 pandemic. Other inflation contributors include vehicle insurance, recreation, and new vehicle prices all up from August 2022.
The Auto Workers Union strike began at companies such as General Motors (GM), Ford (F), and Stellantis (STLA). President, Joe Biden, spoke on Friday. “The companies have made some significant offers, but I believe they should go further to ensure record corporate profits mean record contracts for the UAW,” said Biden. Years of investing in updating their factories have led to greater efficiencies resulting in lower costs to make vehicles. The goal to shift to more electric vehicles to reduce emissions is going to cut into future profits in the short-term as they ramp up EV production. Will the union labor strike lead to supply issues for car deliveries?