After the world shut its borders during the height of the pandemic, consumers are raring to return to the skies. In fact, Expedia Group determined in its Traveler Value Index report that 81% of respondents plan to take at least one vacation within the first six months of 2022.
With so many travel plans in the pipelines over the coming months, airlines will no doubt be looking to capitalize on this rising demand in an effort to rebound from the crippling effects of the pandemic. Whether for domestic or international trips, let’s take a look at some compelling airline stocks to consider investing in as the global travel industry embarks on its recovery.
While multiple COVID-19 international travel guidelines and restrictions remain in place, some travelers may feel inclined to rather take a domestic trip. One low-cost U.S.-based airline to keep an eye on is Southwest Airlines.
Headquartered in Dallas, Texas, Southwest Airlines is offering flights across the United States as well as numerous destinations in Mexico and Puerto Rico. Since the height of COVID-19 travel restrictions, Southwest Airlines has managed to embark on a gradual recovery, announcing a quarterly profit in the final quarter of 2021 — the first since the start of the pandemic.
With the airline recently releasing a packed summer 2022 flight schedule and also considering serving alcohol on flights again, Southwest Airlines seems to be a stock worth considering for investors with a domestic travel focus.
If you happen to have an interest in exploring European travel trends, then Ryanair is the airline to watch. Based in Dublin, Republic of Ireland, Ryanair offers flights to over 200 destinations across Europe, North Africa, and the Middle East.
To date, the airline has managed to recover significantly since the COVID-19 outbreak, reducing its €321 million loss in the fourth quarter of 2020 to just €96 million during the same period in 2021. What’s more, the airline’s summer bookings for 2022 already exceed those of 2019 by 114%, showing that Ryanair is improving on even its pre-pandemic performance.
On the international front, the Atlanta, Georgia-based Delta Airlines led the charge towards post-COVID recovery. The airline was named the Top U.S. Airline of 2021 by the Wall Street Journal, particularly thanks to its low cancellation rate during the pandemic and high rate of on-time arrivals and departures.
Recently, the airline innovated its way into news headlines, jetting the U.S. 2022 Olympic Winter Games team off to Beijing and entering into an app partnership with ride sharing service Lyft. The partnership will entail providing Delta passengers with flight updates via their Lyft app as they travel to the airport via a Lyft vehicle.
If you view diversification as a priority, then stocks from International Airlines Group (IAG) are worth considering. This airline holding company consists of subsidiaries such as British Airways, flagship Spanish airline Iberia, and Irish flagship airline Aer Lingus.
Several of IAG’s airlines are showing strong signs of recovery. British Airways recently decided to reinstate its policy of handing out free snacks after a six-year hiatus, while the airline’s CEO recently suggested that BA has plans to become a “more premium” airline.
Fellow IAG subsidiary Aer Lingus entered into a codeshare partnership with American Airlines, enabling American customers to book trips to Dublin, London Heathrow, and other European cities without booking separate tickets for each leg of the trip.
Iberia has recommenced flights to almost every destination that it operated prior to the pandemic outbreak, with the airline ramping up transatlantic flights to areas such as Argentina. With its subsidiaries each rebuilding their businesses following the pandemic, IAG is a diversified investment choice.
This British-based low-cost airline flies to destinations across Europe as well as selected parts of North Africa and the Middle East. While the rapid spread of the omicron variant resulted in a few challenging months for the airline, easyJet projects that it is on the path to a strong rebound going into the summer of 2022.
As travel restrictions continue to be lifted and consumers express a rising interest in booking vacations and other trips, airlines at large are embarking on the road to recovery. This movement suggests that an uptick in share prices may be on the horizon, giving investors the push they need to consider what airline stocks might be worth a look.
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Investing involves risk. Principal loss is possible. As an ETF, the fund may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. The Fund is not actively managed and would not sell a security due to current or projected under performance unless that security is removed from the Index or is required upon a reconstitution of the Index.
A portfolio concentrated in a single industry or country, may be subject to a higher degree of risk. Specifically, the Index (and as a result, the Fund) is expected to be concentrated in passenger airline, hotel and resort, and cruise industries (“Travel Companies”). Travel Company revenues are heavily influenced by the condition of the U.S. and foreign economies and may be adversely affected by a downturn in economic conditions that can result in decreased demand for leisure and business travel. Travel Companies may be significantly affected by uncertainty in travel, including guest safety, security and privacy, changes in labor relations and insurance costs, issues affecting equipment reliability and longevity, changes in fuel prices, and shortages of experienced personnel.
Beginning in the first quarter of 2020, financial markets in the United States and around the world experienced extreme volatility and severe losses due to the global pandemic caused by COVID‑19, a novel coronavirus. The pandemic has resulted in a wide range of social and economic disruptions, including closed borders and reduced or prohibited domestic or international travel. Some sectors of the economy and individual issuers, including Travel Companies, have experienced particularly large losses. Such disruptions may continue for an extended period of time or reoccur in the future to a similar or greater extent.
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- “Expedia Group Traveler Value Index 2022 Outlook”, 2022, https://welcome.expediagroup.com/content/dam/marketing/welcome2eg/published-assets/wakefield-2022/Q1-Wakefield-Report-2022-v5.0.pdf ↑
- “SOUTHWEST AIRLINES REPORTS FOURTH QUARTER PROFIT AND FULL YEAR RESULTS”, 2 January 2022, https://www.swamedia.com/releases/release-a0731e681107d30a52590eb3f9019ac2-southwest-airlines-reports-fourth-quarter-profit-and-full-year-results ↑
- “Ryanair prepares price cuts as it warns of ‘hugely uncertain’ financial outlook”, 31 January 2022, https://www.theguardian.com/business/2022/jan/31/ryanair-price-cuts-more-flights-loss ↑
- “EasyJet confident of summer recovery after Omicron dents winter bookings”, 27 January 2022, https://www.ft.com/content/49e6d966-1c87-4655-8156-20c9816766ed ↑