When Will the Airline Stocks Recover?
Airlines were hammered in the coronavirus market downturn, which caught the attention of contrarians and deep-value investors. Many people felt like geniuses for buying on the dip ahead of a May rally, but the plot has since thickened with much of those gains being erased. Shares of Delta Air Lines are down 55% year-to-date, while American Airlines dropped 60%, United Airlines has fallen 64%, and Southwest has managed to relatively shine at a mere 38% decline. Long-term investors should consider the evolving industry fundamentals and compare these to historical figures. What results do the airlines need to report to demonstrate true recovery?
Air travel nearly came to a complete halt in April, and the resulting revenue shock fueled worries that large carriers would be unable to meet their monthly debt and lease obligations. Bankruptcy threats are usually enough to rattle cages in the stock market, and that certainly held true in this case. The JETS ETF (NYSEMKT: JETS) dropped from $32 in February to $12 in March, far outpacing major indices. The ETF was volatile for several weeks following the low, before a rally pushed shares as high as $22 in May. That joy was short-lived, as JETS has since dipped to $16.
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Source Fool.com
