The pandemic is the main talking point in any investment decision. As Covid-19 continues to be a significant headline grabber, it is a major influence in online trading.
How are airline stocks faring during the pandemic? There has been a renewal of Covid-19 cases. Motley Fool analyst Adam Levine-Weinberg reports that the latest wave of the pandemic could be worse than the first outbreak. According to The New York Times, there were 35,000 new cases reported in September’s second week as well as 750 deaths per day. Since September, the figures have sharply risen, with cases soaring nearly 5 times, hospitalizations almost tripling, and death rate nearly doubling.
Airline Demand Flattens
There has been a flattening in the number of people traversing TSA checkpoints. This is after gradual growth registered in the previous two months. However, airline stocks have soared higher in the past months, helped by progress made in vaccines, as the following graph by YCharts and Motley Fool, shows for 3 major airlines in the United States, American Airlines ($AAL), United Airlines ($UAL) and Alaska Air ($ALK) as well as the US Global Jets ETF:
Airline Stocks Rally Despite Caution Over Future Growth
Airlines are cautious about future growth with cases continuing to spiral, Levine-Weinberg reports, as per United Airlines’ SEC filing. United Airlines did report a rise in ticket cancellations and a reduction in system bookings. It attributed this to the recent surge in pandemic cases. United Airlines has had its stock turn negative by 0.2% after it offered 25.3 million shares for raising capital on Monday, November 23. Before the bell, the stock had rallied on positive vaccine news before heading to the red.
Alaska Air reported that cash burn could sequentially rise in the period from October to November because of restrictions by various state governments and local authorities. Since the beginning of November, Alaska Airlines has experienced a 25% jump on hopes of the Covid-19 vaccine getting developed by early 2021.
American Airlines also observed this trend. On Monday, November 23, American Airlines led a rally for airline stocks after breakthrough news regarding the Covid-19 vaccine. $AAL was up 8.2% at the close. On Wednesday, the stock moved 9.3% higher.
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