Hurricane Milton is expected to make landfall in Florida on Wednesday evening local time. Morgan Stanley analysts have assessed the potential impact of the hurricane on some leisure companies with operations in Florida, while Jefferies has highlighted the impact of the hurricane on airlines.

Milton, which is expected to hit the Gulf Coast of Florida later tonight, is projected to become the costliest hurricane in U.S. history. According to PowerOutage, over 174,000 customers in North Carolina, Georgia, Texas, Florida, and California are experiencing power outages in the United States.

Leisure and Recreation Companies

On Wednesday, Morgan Stanley examined three companies with operations in Florida — gym franchise Planet Fitness (PLNT.US), sports country club operator Life Time (LTH.US), and golf equipment manufacturer Topgolf Callaway Brands (MODG.US).

Morgan Stanley analysts, led by Megan Alexander, stated in a research report, "Overall, Planet Fitness appears to have the highest risk exposure within our coverage, particularly considering the company's concentrated layout in Florida. However, our analysis in collaboration with the AlphaWise team indicates that the current impact is limited, and it would likely require extended store closure times to pose a material risk to membership trends and estimates."

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The bank expects the impact on Planet Fitness to be minimal, as the company only has five stores in Florida, with only one store in Tampa (on the direct path of the hurricane). For Topgolf Callaway Brands, it has four locations within 40 miles of the hurricane's projected path, all of which are currently closed, and the impact is expected to be limited, with no significant damage anticipated.

Airlines

Meanwhile, Jefferies assessed the impact of Hurricane Milton on airlines on Tuesday. So far, the brokerage firm has found that "considering the route network to Florida," the flight schedules of ultra-low-cost carriers (ULCCs) have been significantly affected.

According to Jefferies, on Tuesday, approximately 41% of Loyalty Travel (ALGT.US) flights were canceled, with this number jumping to 64% on Wednesday. In comparison, private airline Breeze saw this figure at 44% on Wednesday, Spirit Airlines (SAVE.US) and Frontier Group (ULCC.US) at 18%, and Southwest Airlines (LUV.US) at 11%.

Additionally, network operators, including American Airlines (AAL.US), Delta Air Lines (DAL.US), and United Airlines (UAL.US), canceled about 5% of their flights on Wednesday.Jefferies analysts led by Sheila Kahyaoglu stated in a research report, "In 2022, Hurricane Ian (a Category 4 hurricane in Florida) led to the cancellation of over 1,500 flights by airlines in the third and fourth quarters, resulting in a loss of $75 million in revenue for Delta Air Lines and a $40 million revenue loss for American Airlines in the last four days of September. In 2017, Hurricane Harvey (a Category 4 hurricane in Texas) and Hurricane Irma (a Category 5 hurricane in Florida) caused airlines to cancel flights in Houston for 14 days, leading to a loss of $400 million in revenue and a 1.5% profit margin impact for United Airlines."

The analysts added, "These hurricanes led to the cancellation of over 8,000 flights by American Airlines, affecting $75 million in pre-tax earnings, and impacting Delta Air Lines with $120 million in earnings and Southwest Airlines with $100 million in earnings."