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Are Airline Stocks Ready to Take Off as Travel Rebounds?

from Yahoo Finance June 8, 2020

Airline stocks could be looking at a recovery as travel picks up. More than 1.5 million passengers went through TSA checkpoints during Memorial Day weekend – the highest traffic level since March when stay-at-home orders took effect. American Airlines said its traffic was 320 percent better from May 22 through May 25 than April 10 to April 13, when it saw the worst of the pandemic, reports Yahoo Finance.

Carriers have begun to add more flights to service as they anticipate an increase in travelers over summer. Delta Airlines added 100 daily flights in June. Southwest announced a summer travel sale with one-way fares from just $49. In Europe, Ryanair plans to reinstate 40 percent of its flights over the course of summer.

Investors looking for a buying opportunity have flocked to beaten down airline stocks. Yahoo Finance highlights the U.S. Global Jets ETF (JETS), which has tumbled 52.25 percent year-to-date through May 31. Despite the sharp sell-off, JETS has found new investors and rose to $1 billion in assets under management on June 2. The ETF held just $33 million in assets in early March.

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The outbreak of the COVID-19 pandemic and the resulting actions to control or slow the spread has had a significant detrimental effect on the global and domestic economies, financial markets and industries, including airlines. U.S. Global Investors continues to monitor the impact of COVID-19, but it is too early to determine the full impact this virus may have on commercial aviation. Should this emerging macro-economic risk continue for an extended period, there could be an adverse material financial impact to the U.S. Global Jets ETF.