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.[1]
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.
Southwest Airlines Co (LUV)
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.[2]
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.
Ryanair Holdings Plc (RYAAY)
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.[3]
Delta Air Lines Inc Del (DAL)
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.
International Consolidated Airlines Group S.A. (IAG SM)
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.
easyJet (EZJ LN)
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.
The budget carrier announced that it has realized a surge in ticket sales from UK travelers, with UK-based customers outnumbering Europeans customers for the first time since spring 2020.[4]
Clearing the runway
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.
For current performance and holdings, please visit defianceetfs.com/CRUZ
Important Disclosures:
Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security.
The Funds’ investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company. Please read carefully before investing. A hard copy of the prospectuses can be requested by calling 833.333.9383.
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.
The Fund is considered to be non-diversified, so it may invest more of its assets in the securities of a single issuer or a smaller number of issuers. To the extent the Fund is invested in companies of a single country or region, local political and economic conditions and changes in regulatory, tax, or economic policy could significantly affect the market in that country and in surrounding or related countries and have a negative impact on the Fund’s performance. Investments in foreign securities involve certain risks including risk of loss due to foreign currency fluctuations or to political or economic instability, and these risks are magnified in emerging markets. Small and mid-cap companies are subject to greater and more unpredictable price changes than securities of large-cap companies.
CRUZ is new with a limited operating history.
Total return represents changes to the NAV and accounts for distributions from the fund.
Median 30 Day Spread is a calculation of Fund’s median bid-ask spread, expressed as a percentage rounded to the nearest hundredth, computed by: identifying the Fund’s national best bid and national best offer as of the end of each 10 second interval during each trading day of the last 30 calendar days; dividing the difference between each such bid and offer by the midpoint of the national best bid and national best offer; and identifying the median of those values.
Commissions may be charged on trades.
CRUZ is distributed by Foreside Fund Services, LLC.
- “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 ↑
Leave a Reply