main points

Performance of aviation stocks

Since the beginning of the pandemic, airlines have not performed well

Outlook for Aviation Stocks

conclusion

Due to the spread of delta variants in major countries such as the UK and the United States, aviation stocks have been in a difficult position. In the past 18 months, aviation stocks have been highly regarded as the pandemic has limited the industry's best performance and become one of the hardest hit industries. Due to the lockdowns associated with the pandemic, the industry has suffered losses rather than profits, and people have been restricted from traveling, making it difficult for airlines to make money.

Airlines were heavily hit by the pandemic in 2020, but rebounded well in 2021 as the vaccine eased people's fear of travel and suppressed holiday demand, causing the population to return to the airport this summer. We are far from normal, but investors have pushed up this year's stock price in the so-called 'reopening of trading'. Investors have been betting on large-scale vaccination plans and believe that vaccines may help boost demand for airline stocks, allowing countries to open their borders and allow people to travel to vacation destinations. Major countries with major economies have been pushing for major vaccinations, but their efforts face another challenge as the Delta variant and potential fourth wave will halt plans to fully reopen the economy.

Firstly, these COVID19 themes are not surprising. Investors had previously expected that ticket sales would slow down due to the Delta option, and the impact on the entire industry would be more manageable than expected. The forecast also shows that the airline's recovery strategy worked at the beginning of this quarter before the daily surge in new cases, which is good news for long-term shareholders.

If there is news that the White House will require all federal employees and millions of government contractors to be vaccinated against COVID19, the industry may also rise. The population vaccinated is the quickest and easiest way to end the pandemic, and the normalization of vaccine regulations by the government may make it easier for other employers to demand vaccination.

Outlook for Aviation Stocks

EasyJet Airlines

The stock price of EasyJet Airlines has gone through a difficult run, dropping to a low point in January. In the past 18 months, the aviation industry has been at the forefront of the impact of the epidemic, reporting a loss of £ 701 million as of the end of the first half of May. In July, EasyJet Airways stated that the outlook for the third quarter did not look optimistic as the airline stated that it expected its capacity to only account for 15% of its capacity in 2019.

It has been proven that the company's transportation capacity in the third quarter was 17% of that in 2019, and has been below 20% for three consecutive quarters. However, this is equivalent to a loss of $318.3 million.

In the fourth quarter, the airline was more optimistic and expressed interest in increasing capacity to 60% of 2019 levels, especially on more popular routes.

At that time, EasyJet also stated that it had paid an additional £ 122 million in customer refunds and vouchers worth £ 230 million this quarter.

Easy Jet Technical Analysis Sep 162021 released by Lulama from a range of markets

In May, the airline announced a working capital of £ 2.9 billion. However, as a sign that management hopes to weather a potentially difficult winter, EasyJet announced that it will return an additional $1.2 billion to its January low as shareholders need to spend more additional funds.

In the past 18 months, through various efforts to support its financial situation, the airline has raised over £ 5.5 billion since the outbreak of the pandemic. It has also taken the route of selling and leasing 43 aircraft to raise additional cash, although it has clearly decided not to increase investment in this area for the time being. It left an additional 141 fully owned and unused aircraft, accounting for over 40% of the remaining fleet.

Delta Airlines

Delta Airlines' stock price has been under pressure as recent relationships suggest that the European Union can reintroduce travel restrictions related to the coronavirus for US passengers. The reason for UU's decision is the active spread of the delta variant of the coronavirus in the United States, resulting in an average infection rate in the United States exceeding that of the European Union.

This movement will be an important success waiting for the normalization of global travel. The spread of delta variants has brought some pressure to the industry. Starting from early June, the actions of airlines have decreased, and new developments can serve as additional bearing catalysts.

Delta Aviation Technology Analysis released by Lulama from the Scope Market on September 16, 2021

In the coming weeks, traders may pay attention to delta variant spreads. Obviously, the increase in delta variables will have an impact on the demand and travel decisions of other countries.

In this situation, it remains to be seen whether Delta Airlines' stock price can gain momentum in the short term. The company's valuation remains attractive, but concerns related to the coronavirus may put greater pressure on the stock. Due to the surge in Delta variants, the rebound in business and international travel may be delayed, and inventory needs to remain stable in terms of viruses to maintain a sustained upward trend.

United Airlines

Due to concerns about sluggish demand for air travel, the stock of United Airlines (NASDAQ: UAL) fell in the fourth quarter, with almost all airline stocks. Although the sustained surge in coronavirus cases caused by delta variants may lead to short-term uncertainty, the long-term trend of the stock looks cheap. Ordering 270 aircraft from United Airlines in the United States may increase revenue and profit growth. Interestingly, the third round of salary distribution will support employee salaries until September 30th, and the number of passengers at TSA checkpoints has not significantly decreased. With the relaxation of restrictions, the demand for air travel in the second quarter has also increased - after the current surge, people hope that a similar trend will emerge.

United Airlines holds a technical analysis released by Lulama from the scope market on September 16, 2021

The stock price of UAL has fallen to its low point in January, and as the company establishes a structure for its development, it may seek recovery. Another reason for the decline in United Airlines' stock price may be that United Airlines recently announced that it will increase the number of new recruits as its flight plans expand. With the rebound of the US economy, the expanded flight schedule is a positive development. Due to the belief that the COVID-19 pandemic is easing, the recent withdrawal has led to a resurgence in demand for airline seats.

United Airlines recently announced the expansion of its fleet.

Investors may also be cautious about the more environmentally friendly measures airlines must take.

conclusion

Due to the spread of delta variants, aviation stocks have recently experienced a large-scale sell-off. Despite large-scale vaccination plans, the industry still faces significant challenges as more variants reappear and force countries to restrict travel. The aviation industry seems to take a long time to start recovering. However, once the industry begins to recover, aviation stocks are expected to recover, and long-term investors will focus on a long-term pullback.