The airline industry has had a tough time during the ongoing pandemic. It is one of the sectors that has been disproportionately been affected by lockdowns and travel bans. Airline industry stocks had taken a battering as a result of a negative business environment. The Bloomberg EMEA Airline Index, which tracks European airlines, had fallen down significantly by more than 58%. Recently, it has pulled back 32% from its May 2020 lows.
The pullback is a result of some positive news related to the airlines. The news relates to the gradual opening up of economies across Europe and some parts of East Asia. Michael O’Leary, CEO, Ryanair, said in an interview, “We have seen a big surge in bookings on our flights out of Ireland and the UK to Spain, Portugal, and Italy over the weekend, and that seems to be continuing this week.”
Across the Atlantic, the US airline industry has also seen some encouraging developments. UBS recently upgraded Southwest Airlines to buy on the rationale that a clearer path for domestic travel recovery is now visible. Airline stock prices surged on 26th May as United Airlines, American Airlines, Delta Airlines, JetBlue Airways, and Southwest Airlines all jumped significantly. The uptick was partly due to the rally in European airline stocks and partly due to new data released by the Transportation Security Administration (TSA). The TSA reported the number of travelers had crossed 300,000 in one day. This is nearly four times the pandemic-low of 87,534 recorded in April 2020.
The overall sentiment still remains downbeat as most industry executives and observers feel that it may be a few years before air travel demand reaches pre-pandemic levels. For now, aviation is a sector to be watched closely for positive and negative developments.