The only way is up over the medium term?
One of the hardest hit industries over COVID-19 has been the airline industry. Significant passenger number reductions have resulted in some planes flying empty between airports and revenues have been badly hit for airlines. Aircraft manufactures have had to reduce their workforce and production schedules. Airbus reduced its wing production on factories in Broughton, Filton and Bremen. Boeing dropped employees alongside General Electric. Rolls Royce are planning to drop around 9,000 jobs primarily from its civil aerospace sector.
Is the worst behind us?
Although airlines share prices are still trading near their four month lows, analysts are starting to look past the pandemic and signal an earnings rebound.One area to consider with airlines is that unlike some other sectors they are likely to rebound quite strongly after COVID-19. Holiday makers, travel for family and work related trips are reasonably expected to rebound to very similar pre-COVID19 levels. Taking a look at the chart below you can see that Earnings Per Share are starting to pick up (blue line).
So, this could be the time to pick up a bargain airline stock for your portfolio for, pardon the pun, the long haul.
