Airline companies have easily been one of the worst-hit industries over the past couple of months. Even some of the most long-term, value-oriented investors in the world (like Warren Buffet) have decided to give up on airline stocks altogether. However, with some experts suggesting that the economy could end up recovering sooner than anticipated, eager investors hoping for a return to normal are jumping on any good news they can find. That’s exactly what happened on Monday when new data from the U.S. Transportation Security Administration (TSA) showed a significant increase in the number of people passing through its checkpoints.
The TSA went on to say that the total number of daily travelers has increased to 253,807, which was the highest its been since March 24. That’s much higher than the 95,000 or so daily average that’s been the norm during the height of the coronavirus pandemic. While this new figure is still lower than it was a year ago, it’s a significant improvement from before, and investors jumped on this news as a possible indication that the economy might get better after all.
“The gradual improvement in fares has continued well into May with sequentially improving levels from April, which fits with the narrative of some semblance of demand returning, albeit of an extremely low base,” wrote Raymond James analyst Savanthi Syth in light of the data. “An uptick in fares is consistent heading into the ‘peak’ summer travel season,” he added.
While this is definitely some good news for the travel industry as a whole, its hard to tell whether or not the situation will recover fast enough to avoid some major potential bankruptcies. Boeing’s CEO has gone on to warn that many airline companies could go bankrupt during this year, if not the entire industry as a whole, if something isn’t done by the government. While it’s definitely true that Boeing’s CEO has an interest in seeing his company receive government bailouts, many other industry experts agree with his assessment as well.
Overall, Monday was a good day for airline stocks because of this TSA news. Shares of Delta Airlines shot up around 14%, while American Airlines and United Airlines both shot up 9.2% and 21.1% respectively as well. However, most airline stocks still have a long way to go before they make a full recovery, with many saying that 2020 is the worst year in the history of the airline industry. If even Warren Buffett decided that now’s not the time to invest or hold airline stocks despite how cheap they are right now, then the average investor should be extremely cautious about trying to do exactly that.
Delta Airlines Company Profile
Atlanta-based Delta Air Lines is one of the world’s largest airlines, flying to more than 325 destinations in 60 countries. Delta operates a hub-and-spoke system, where it gathers and distributes passengers across the globe through key locations in Atlanta, New York, Salt Lake City, Detroit, Seattle, and Minneapolis-St. Paul. Delta generated just over $41 billion in revenue during 2018 and operated a mainline fleet of more than 850 aircraft. – Warrior Trading News