While the U.S. Airlines industry may still be months away from sustained recovery, the lead-up to Thanksgiving came with some positive signs for the big carriers and investors in the industry.
Millions of people had already flown by Wednesday before Thanksgiving, and a significant portion of these passengers will be on return flights in the coming week. Coronavirus concerns aside, this is good news for beleaguered companies like Delta Air Lines (NYSE: DAL), American Airlines (NASDAQ: AAL), and United Airline Holdings (NASDAQ: UAL).
Thanksgiving Air Travel Numbers
More than 7 million passengers passed through TSA checkpoints between Wednesday the 18th and Wednesday the 25th. Compared to the previous week, this was an increase of 22%. The increase in passengers was linked directly to the Thanksgiving holiday, with passengers either returning home from college and work or visiting extended family members.
The week-over-week increase is positive for the airline industry, but it’s still significantly down from the numbers this time last year. In 2019, almost 17 million passengers passed through TSA checkpoints in the same period.
Wednesday, the day before Thanksgiving, was the busiest day of the entire reporting period. More than 1 million people were processed by the TSA.
An Opportunity to Buy Airlines Stocks?
Between the largest U.S. carriers, the airline industry is expected to lose as much as $27 billion this year. Increased costs related to Coronavirus preventative measures, fewer passengers, and fewer routes will contribute to the decline.
Shares have followed the downward revenue trajectory. Delta has lost almost -30.00% of its stock value in the year to date. American is down by -47.91%, and United is performing even worse with a -48.19% decline.
These figures are shocking, but they do reflect the current conditions, rather than the actual potential of these stocks. All of the three major airlines have taken steps to reduce costs during the Coronavirus Pandemic. They also received funds from the federal government earlier in the year.
Thanksgiving was a sign that a recovery is likely in 2021. There are now multiple Coronavirus vaccines approaching FDA approval, and widespread distribution is likely to begin early next year.
Airline stocks can be considered bargains today. While they come with risk, the potential long term upside could be significant, especially considering the hefty discounts compared to stock prices a year ago.
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