This website collects cookies to deliver better user experience. Cookie Policy
Accept
Sign In
The Wall Street Publication
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Reading: Is This the Real Turning Point for Aviation Stocks?
Share
The Wall Street PublicationThe Wall Street Publication
Font ResizerAa
Search
  • Home
  • Trending
  • U.S
  • World
  • Politics
  • Business
    • Business
    • Economy
    • Real Estate
    • Markets
    • Personal Finance
  • Tech
  • Lifestyle
    • Lifestyle
    • Style
    • Arts
  • Health
  • Sports
  • Entertainment
Have an existing account? Sign In
Follow US
© 2024 The Wall Street Publication. All Rights Reserved.
The Wall Street Publication > Blog > Markets > Is This the Real Turning Point for Aviation Stocks?
Markets

Is This the Real Turning Point for Aviation Stocks?

Editorial Board Published October 6, 2021
Share
Is This the Real Turning Point for Aviation Stocks?
SHARE

Investors who bought aviation stocks to ride the pandemic recovery have learned the hard way that this is a turbulent trip. Things could get smoother, but it is worth shelling out for a first-class ticket.

Contents
Airline stocks have gained more than 10% over the past month.SHARE YOUR THOUGHTSHeard Stock-Picking Leaderboard

Airline stocks have gained more than 10% over the past month, as broader equity markets tumbled. However, this is merely a partial rebound from a bad summer for aviation shares, including those of plane makers. Only budget-airline stocks currently trade above their pre-Covid levels.

Money flocked to the sector after February, as vaccination campaigns led to a sharp improvement in ticket sales. On top of hopes of pent-up demand for summer travel, carriers were expected to emerge from the crisis with lower unit costs, having cut as much fat as possible.

When the summer actually came around, though, it became apparent that there was some wishful thinking baked into the trade.

One problem was that an excessive focus on bumper U.S. numbers obscured the havoc caused by coronavirus variants in developing nations, which ended up affecting domestic U.S. traffic too. The long tail of the pandemic has delayed the reopening of transcontinental routes, pushed back the return of corporate travel and kept global seat capacity stagnant.

Moreover, many carriers, especially in Europe, likely had to keep fares low to lure vacationers to a handful of available destinations; coming third-quarter reports will shed light on just how low. The cutthroat nature of the airline business means it isn’t a straightforward “reopening trade.” American airlines have already announced big fleet expansions and cabin refurbishments to tempt business travelers back. The consequent 17% growth in U.S. domestic narrow-body seats between 2020 and 2023 could end up having a big impact on the fares passengers pay to fly a mile, according to estimates by Sheila Kahyaoglu at Jefferies.

A final summer lesson was that quickly bringing aircraft and staff back involved more expenses and headaches than expected, to the point that analysts are rethinking their thesis of permanently lower costs. For most of this year, consensus unit-cost forecasts for the top-three U.S. legacy carriers for the next two years have been consistently reduced, but recently they have started to rise again, figures from Visible Alpha show.

And yet, we seem more likely to be at a genuine turning point now than before the summer. Airline capacity across countries has roughly tracked vaccination rates this year, and the percentage of the world population that has received at least one dose is finally approaching 50%. Cases appear to have peaked in the U.S., which has said it would reopen for European travelers sometime in November.

Airline stocks have gained more than 10% over the past month.

Photo: Dave Rushen/Zuma Press

SHARE YOUR THOUGHTS

Have you booked a flight for domestic or international travel this fall? Join the conversation below.

With hints that other travel barriers could soon fall and the additional support of rising bond yields, aviation stocks may have fuel left to burn during the coming earnings season. The numbers themselves will look stellar relative to last year’s washout third quarter: Wall Street analysts expect the S&P 500 industrial sector to post earnings growth of 65%, of which carriers are expected to contribute three-quarters.

Still, best-in-class names like Delta Air Lines, Southwest Airlines, Airbus and Ryanair seem like the safest way to profit from any positive market sentiment. In aviation, too much bargain hunting often puts investors in a tight spot.

Heard Stock-Picking Leaderboard
According to a recent Charles Schwab survey, 15% of all U.S. stock market investors said they first began investing in 2020. Picking a stock, however, may not be as easy as it sounds. WSJ’s Aaron Back explains the factors at work when stock-picking. Photo illustration: Rafael Garcia

Write to Jon Sindreu at [email protected]

Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

TAGGED:MarketsPAIDWall Street Publication
Share This Article
Twitter Email Copy Link Print
Previous Article Lack of Engineers Keeping Some Firms Out of the Cloud Lack of Engineers Keeping Some Firms Out of the Cloud
Next Article Theaters Are Counting on James Bond’s Heroics Theaters Are Counting on James Bond’s Heroics

Editor's Pick

Pleasure parade cancelled after being halted by pro-Palestinian protesters

Pleasure parade cancelled after being halted by pro-Palestinian protesters

Ottawa’s annual Pleasure parade was cancelled on Sunday after it was halted by a native pro-Palestinian advocacy group that blocked the…

By Editorial Board 5 Min Read
Learn This Earlier than Shopping for a Window Air Conditioner
Learn This Earlier than Shopping for a Window Air Conditioner

As is the case for many individuals, my dwelling can't be retrofitted…

11 Min Read
Save 20 % on Our Favourite Earbuds for Android
Save 20 % on Our Favourite Earbuds for Android

Trying to improve your wi-fi earbuds with out reaching deep into your…

3 Min Read

Oponion

Musk’s Tax Bill on Stock Options Fell Along With Tesla’s Share Price

Musk’s Tax Bill on Stock Options Fell Along With Tesla’s Share Price

Elon Musk already faces a federal tax bill approaching $2.7…

November 23, 2021

Most costly recall in historical past pressured Japanese auto firm Takata to file for chapter

Fox Enterprise Briefs: Takata remembers 10…

November 16, 2024

Ron DeSantis takes on Disney over parental-rights bill in battle of Florida titans

The Walt Disney Co. may have…

March 30, 2022

Inside a Ransomware Hit at Nordic Choice Hotels

Nordic Choice Hotels, a chain with…

January 12, 2022

What’s Macklin Celebrini’s score in EA Sports activities’ NHL 25? What about different Sharks gamers?

SAN JOSE – San Jose Sharks…

September 22, 2024

You Might Also Like

Spirit Airways recordsdata for second chapter in underneath a 12 months as low-cost service continues to battle
Markets

Spirit Airways recordsdata for second chapter in underneath a 12 months as low-cost service continues to battle

The Factors Man founder Brian Kelly discusses how Spirit Airways' chapter may have an effect on journey. After submitting for…

4 Min Read
Cracker Barrel’s rebrand reversal follows monetary struggles
Markets

Cracker Barrel’s rebrand reversal follows monetary struggles

XX-XY Athletics founder and CEO Jennifer Sey weighs in on Cracker Barrel's emblem controversy and a Utah transgender case on…

6 Min Read
What’s the Cracker Barrel CEO’s annual wage?
Markets

What’s the Cracker Barrel CEO’s annual wage?

GOP strategist Ford O’Connell assesses if and the way Cracker Barrel can come again from their rebrand ‘marketing fiasco’ on…

3 Min Read
Bracing for Nvidia, when measurement issues
Markets

Bracing for Nvidia, when measurement issues

Niles Funding Administration founder and portfolio supervisor Dan Niles unpacks the outlook of the electrical automobile firm on 'The Claman…

4 Min Read
The Wall Street Publication

About Us

The Wall Street Publication, a distinguished part of the Enspirers News Group, stands as a beacon of excellence in journalism. Committed to delivering unfiltered global news, we pride ourselves on our trusted coverage of Politics, Business, Technology, and more.

Company

  • About Us
  • Newsroom Policies & Standards
  • Diversity & Inclusion
  • Careers
  • Media & Community Relations
  • WP Creative Group
  • Accessibility Statement

Contact

  • Contact Us
  • Contact Customer Care
  • Advertise
  • Licensing & Syndication
  • Request a Correction
  • Contact the Newsroom
  • Send a News Tip
  • Report a Vulnerability

Term of Use

  • Digital Products Terms of Sale
  • Terms of Service
  • Privacy Policy
  • Cookie Settings
  • Submissions & Discussion Policy
  • RSS Terms of Service
  • Ad Choices

© 2024 The Wall Street Publication. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?