Airline stocks soared (sorry, couldn't resist) in November, with the three major "discount" carriers -- Southwest Airlines (LUV -0.55%), Spirit Airlines (SAVE 2.61%), and JetBlue Airways (JBLU 0.88%) -- rising by double digits.
However, it was Hawaiian Holdings (HA -3.06%), the parent of niche carrier Hawaiian Airlines, that had the biggest win of the month, up an amazing 28.8%.
The best news for investors, though, is that there wasn't just one single reason why these companies' stocks handily outperformed the S&P 500 during the month. Instead, here are the multiple reasons they went up and what investors should do now.
We'll be home for Christmas
The biggest gains for these stocks came late in the month, after the major airlines American Airlines Group (AAL -0.85%), Delta Air Lines (DAL 0.14%), and United Airlines parent United Continental Holdings (UAL -0.02%) posted their Thanksgiving travel numbers. The across-the-board strength from the three legacy carriers was rewarded by the stock market, and stock prices jumped industrywide in anticipation of a record holiday travel season.
United announced that it set several company records during the Thanksgiving week (defined as the Sunday before Thanksgiving through the Sunday after Thanksgiving, Nov. 19-26), including an all-time company record for on-time departures. American Airlines announced it had served 5.5 million customers on 55,463 flights, with about 4 million bags checked. Meanwhile, Delta carried 2.35 million customers on nearly 23,000 flights with no cancellations.
A busy holiday travel season would, of course, be a boon to all U.S. airlines, so even though Southwest, JetBlue, and Spirit didn't post their numbers, their stocks still benefited.
A competitor stumbles
The biggest airline news at the end of November was that a glitch in American Airlines' internal scheduling system had left thousands of holiday flights without pilots. Concerns rose that a significant number of the 15,000 flights would have to be delayed or cancelled, jeopardizing the company's holiday operations.
That news was enough to put the brakes on American's stock, which flatlined even as its competitors' all jumped higher, due in part to the expectation that customers would seek alternatives to American rather than risk having their Christmas plans ruined.
American quickly assured customers that the problem was being resolved, prompting the stock to rise a bit more. Shares still finished the month up 7.8%, but we can only imagine how well it would have done without the epic scheduling snafu.
And then there was one
But it was Hawaiian Holdings that had the best month, and while it -- like its competitors -- benefited from American's stumble and the Thanksgiving weekend numbers, its biggest jump came on Nov. 9, when competitor Island Air announced it was shutting down and filing for bankruptcy the very next day on Nov. 10.
After Aloha Airlines shut down in 2008 and Mesa Air Group pulled out of the Hawaiian market in 2014, Island Air and Hawaiian Airlines became the two dominant carriers flying inter-island flights among the Hawaiian islands. Now, Hawaiian has a virtual monopoly, as its only remaining competitor is the tiny Mokulele Airlines, which exclusively flies nine-seat turboprops.
Hawaiian quickly moved to capitalize on the situation, offering special fares and standby opportunities for Island ticketholders. While this is clearly great news for Hawaiian and its shareholders, though, the company's share price still hasn't fully recovered from the news that Southwest would begin offering flights from the West Coast to Hawaii, and would even "consider" inter-island flights.
With Island Air gone, perhaps that consideration is one step closer to becoming a reality for Southwest and a problem for Hawaiian.
Despite the fantastic November these airline stocks had, it hasn't been a good 2017 -- so far -- for most of them. Only Southwest is beating the S&P's year-to-date performance. All the others are lagging it by at least 10 percentage points, while Spirit and Hawaiian are lagging the S&P by more than 40 percentage points year to date.
There are some good reasons to believe that Spirit's and JetBlue's structural advantages are being underestimated by the market, and if you agree, buying in before the holiday season wraps up is a good idea. Hawaiian may also have some upside, but I wouldn't underestimate the potential for Southwest -- already heading to the Aloha State -- to further disrupt Hawaiian's operations by launching inter-island flights, which would almost certainly send the stock back down again.
For current shareholders of any of these airlines, hang on to those shares and hope that a great holiday travel season gives them a shot in the arm.