Airline stocks rise for third day as spring break bookings rise


Airlines shares surged for a third day yesterday as travelers appear to rush to book travel to take advantage of the upcoming U.S. spring break, with several companies in the industry saying demand has increased in recent times as people feel safer to travel now because millions are vaccinated.

At an event hosted by JP Morgan, executives from United Airlines, American Airlines and Delta Airlines all pointed to a recent spike in demand, American boss Doug Parker noting that the past three weeks have been the best for the business since the pandemic began.

Meanwhile, Delta Airlines chief executive Ed Bastian has indicated his company will likely break even during March amid this surge in summer bookings in the spring.

In addition, Scott Kirby, the boss of United Airlines, pointed to a strong recovery in demand for long-term travel, as vaccines are set to become the end of the game everyone has been waiting for, even as associations and leaders of the industry have all been fairly cautious. to predict how long it will take travelers to return to the plane at a rate similar to that seen before the pandemic stroke.

In contrast, the impact of vaccinations has yet to be felt by the demand for air travel to the United States, as the volume of daily checks carried out by the Transportation Security Association (TSA) indicates that the number of passengers passing through airports remains down 57% since the start of this year compared to the same period in 2020 and 2019.

In this regard, around 64.5 million people have undergone such screenings since the start of 2020 compared to 150.37 million during the same period a year ago.

That said, the number of passengers screened by the administration in the past 5 days has exceeded 1.2 million – indicating a strong recovery from daily levels seen since the World Health Organization (WHO) classified the health emergency as a pandemic in mid-March last year.

Shares of the U.S. Global JETS ETF (JETS) jumped 3.7% in the stock trading session at $ 28.71, hitting a new post-pandemic high after rising 2.7% the day before.

So far this year, the exchange-traded funds (ETFs) generated a 28.3% gain for investors although it is still trading 9% below its pre-pandemic levels.

Among US-based airlines, American and Spirit Airlines have had the best performances this year, with both carriers registering a 60% gain since the start of 2021, followed by JetBlue and United, which have increased by more than 40%. % during the same period.

What’s next for airline stocks?

With more than 109 million doses of the vaccine already administered to U.S. residents, the future looks brighter and brighter for U.S. airline stocks – even if the ultimate impact of the massive debts they’ve had to incur to survive the pandemic remains a long-term concern. Course.

For now, the industry as a whole is likely to recover at a faster rate than expected thanks to pent-up demand.

If this were to be the case, it is likely that JETS could reach its pre-pandemic levels in the near term, although it is difficult to argue that the industry’s situation seems as stable as it was. at the time.

Meanwhile, the surge in fuel prices could also weigh on the advance of airline stocks, meaning traders should keep an eye on the situation in the market. oil market since a steady rise in fuel costs could slow the recovery of airlines in the coming quarters.

US Global JETS ETF (JETS) price chart – View of one day candles with volume, RSI, MACD and other indicators – Source: TradingView

For now, the last Price action seen by JETS shows a bullish pattern, with the RSI hitting its highest level since June 2020 accompanied by a golden cross in the ETF’s short-term moving averages.

Additionally, yesterday’s price action left behind a bullish spread that could serve as support for further bullish moves, with an initial target set at $ 32 per share – the highest before the pandemic of the United States. ‘AND F.

Once and if we get there, it would be difficult to sustain further upside as that particular level served as strong resistance before the pandemic hit. In this regard, given that the situation of the commercial aviation industry remains uncertain, the chances of exceeding these levels are particularly low.

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