A strong dollar can wreak havoc as it makes US products more expensive abroad. But the greenback’s rise has been a tailwind for the major airlines as US travelers head across the pond where their dollar stretches further.
“Europe is an incredibly screaming buy … as a tourist destination,” Delta president Glen William Hauenstein told analysts recently during the carrier’s quarterly results. “People are finding that, particularly in Southern Europe, … the weather is actually pretty nice in the winter and the streets aren’t as crowded, so it’s not a bad time to go.”
The sentiment was echoed across the major carriers which all posted records for their last quarter. Shares of both United (UAL) and Delta (DAL) hit all-time highs earlier this week, while American Airlines (AAL) stock fell on a weak outlook as the carrier continues to reverse a corporate sales strategy and combat higher non-fuel costs.
But even the laggard among the big three airlines noted the joys of a strong greenback.
“The strong dollar is absolutely going to have an impact on buying and travel to Europe this summer,” American Airlines CEO Robert Isom told analysts during the company’s earnings call on Thursday.
The US dollar has rallied against a basket of currencies (including the euro) in recent months, touching a two-year high in January amid tariff uncertainty under the Trump administration and expectations of slower rate cuts this year.
Though the dollar index (DX=F, DX-Y.NYB) has eased recently, it is still up roughly 7% from its September lows.
International travel has been on an upswing since 2023 as cross-border spending boomed following the pandemic.
An increased trans-Atlantic demand pattern is also having an impact on seasonality. United Airlines management, echoing Delta’s Hauenstein, noted Europe is becoming less of a seasonal spot and more of a year-round destination.
“Europe always did not so great, is the polite way to say it, particularly from Jan. 15 through mid-March. And now we’re seeing a totally different result where people are willing to go on a Southern European vacation,” United’s chief commercial officer Andrew Nocella said.
The European travel boom comes as the big carriers have increased their focus on premium travel, which includes perks like extra legroom, refundable tickets, and early boarding.
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In recent months, United announced route expansions to places like Marrakesh, Morocco; Palermo, Italy; Bilbao, Spain; and even Nuuk, Greenland.
“This is an airline that’s looking at the future, particularly internationally,” Mike Boyd, president of aviation research and consulting company Boyd Group International, told Yahoo Finance.”They’re adding routes like that because they see they can get a lot of premium revenue there. They’re not done with that.”
Airlines also benefited from lower fuel costs last quarter as oil prices slid and the dollar rose. A strong currency tends to put pressure on commodities, which are invoiced in dollars.
Last quarter, United spent roughly 19% less on aircraft fuel costs than in the same period the prior year.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre.
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