While the coronavirus had a social and financial impact on all of us to some degree or another, some households and industries were more adversely impacted than others.
Take civil aviation and airlines, for example, with industry revenues of just $328 billion barely 40% of the previous year’s total. In nominal terms, this is the same as the amount generated through 2000, while air traffic isn’t projected to return to normal levels until 2024.
However, the good news is that airlines have begun to recover in the wake of the pandemic, albeit tentatively. But what are the most attractive airlines to invest in as a result? Let’s find out!
How Has the Industry Recovered Since Covid-19?
While productivity and growth in the airline industry are projected to nearly double when compared with the nadir of 2020, the baseline recovery scenario for this year has declined incrementally in recent weeks.
More specifically, the baseline recovery forecast has declined from 73% to 71% of total global revenue in 2019, with this equating to a projected monetary turnover of $475 billion (as opposed to $488 billion).
So, although the recovery is apparent, it’s also been held back by several macroeconomic and geopolitical factors, including the war in Ukraine.
Continued coronavirus lockdowns in China and reduced global GDP forecasts are also taking their toll on demand and international spending, particularly as the world’s economy inches closer to a technical recession.
What Are the Best Airlines Stocks in 2022?
The tentative recovery in global airlines certainly creates an opportunity for investors, particularly those of you who leverage flexible vehicles like CFDs. But what are the best airline stocks to invest in?
- 1. Southwest Airlines (LUV): We’ll start with Southwest Airlines (LUV), which is widely traded on the NASDAQ index. This stock is a blue-chip of airlines and one that continues to thrive thanks to its robust balance sheet and innovative, low-cost business model. It also retains one of the best credit ratings in the industry and significant cash holdings of $12.5 billion, alongside a market cap value of $22.23 billion in total.
- 2.United Airlines Holdings Inc. (UAL): United Airlines Holdings Inc. (UAL) outperformed the market through the coronavirus pandemic, posting revenue of $7.6 billion in Q1 2021 (just 21% lower than the same figure from the first quarter of 2019). This firm’s increased yield and capacity also help to offset rising oil prices, helping it to maintain a fair value estimate of $57 per single share.
- 3.Delta Air Lines (DAL): We’ll close with another NASDAQ favourite in the form of Delta Air Lines (DAL), which remains one of the key driving forces behind the recent innovation that has transformed the industry as a whole. Post-pandemic, Delta Air Lines has retained a stable balance sheet and relatively robust labour relations, while its total market cap value of $21.08 billion makes it an excellent choice to lead the market as it continues to recover.
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