Ignoring warnings from the CDC, more than one million passengers per day boarded airliners over the last ten days. 1.46 million passengers passed through TSA security on Friday at the start of the weekend, a new flying record for the Coronavirus Pandemic. This was followed by 1.3 million on Saturday, the last day for which TSA data is available.
It’s a sign that Americans are no longer as willing to comply with government recommendations.
The CDC recommends that people avoid travel unless necessary. While health experts aren’t thrilled with the news, it will likely come as a relief to investors, airline operators, and the countless people who work in the aviation and tourism industries.
Increased Passenger Traffic is a Sign of Recovery
With more people boarding planes, airlines are starting to see signs of a recovery that they desperately need. Last week, air travel numbers were up year-over-year for the first time since 2019. Although the milestone is less impressive when considering that air travel essentially ground to a halt in 2020, it’s still a sign that better days are coming for companies like United Airlines, Delta, Southwest, and others.
Of course, with more people traveling intercity and interstate, there’s a higher risk of COVID-19 transmission. While America has secured more than enough vaccine doses for the entire population, up to 90% of people are still unvaccinated.
Dr. Rochelle Walensky, director of the CDC, said last week that “What we have seen is that we have surges after people start traveling.” Walensky pointed to the Christmas holidays, Labor Day, and July 4 as examples.
It’s Prime Time to Consider Airline Stocks
While it will be months before we are likely to see a strong sustained recovery in airline earnings, now is still a good time to consider airline stocks. They have been heavily devalued over the last year, making the best ones look like bargains when considering the potential upside.
- Delta Air Lines Inc. (NYSE: DAL) has a high-end analyst target price of $66.00.
- United Airlines Holdings Inc. (NASDAQ: UAL) has a high-end analyst target price of $74.00.
- Southwest Airlines Co. (NYSE: LUV) has a high-end analyst target price of $73.00.
Any investor confident in America’s long-term economic recovery, and the associated airline recovery, will find these stocks to be compelling as we move towards the second quarter.
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