Without a doubt, of all the industries impacted due to COVID-19, the airline industry was hit hardest. International Air Transport Association (IATA) estimates that airlines globally will lose at least $314 billion due to the outbreak. As a result, you’d want an Airline stocks list to look at.
The epic crash and burn in airline stock prices have left many investors wondering if now is the time to buy? Considering the fact that they’ve hit rock bottom, is it even possible they can go further?
It has gotten so bad that the Oracle of Omaha completely exited his Airline positions, citing forthcoming turbulence. Around the same time, Air Canada – Canada’s biggest Carrier released a dire quarterly report stating it would take at least three more years to reach 2019 revenue levels.
At this point, many investors are wondering if it’s time to buy the dip. Before committing your hard-earned capital, here are a few things to be aware of if you’re considering buying airline stocks after the 2020 market crash.
Chart by TradingView.
Table of Contents
List of Airline Stocks
| Symbol | Name |
|---|---|
| LUV | Southwest Airlines Co |
| DAL | Delta Air Lines, Inc. |
| JBLU | JetBlue Airways Corporation |
| AAL | American Airlines Group Inc |
| UAL | United Airlines Holdings Inc |
| ALK | Alaska Air Group, Inc. |
| SAVE | Spirit Airlines, Inc. |
| $BA | The Boeing Company |
Why Have Airline Stocks Plummeted in Price?
I don’t think I have to mention the elephant in the room, but the world has mostly been in lock down. Lock down means no one is allowed to go anywhere.
And the effects couldn’t be more apparent than in Air Canada’s most recent quarterly report. I suggest you sit down for this. In the last quarter alone, Air Canada lost a staggering $1.05 billion (yes billion) and saw its revenue decline by $712 million.
Overall, Air Canada (TSX:AC) fell 68%, from a 52-week high of $52.71 to a low of $9.27 and remains down. As of the time of this blog post writing, Air Canada was trading at $20.29.
Our Airline stocks list looks at other Airlines as well. If you’d like to talk about the moves Airlines are making, make sure to check out our trading room.
List of Airlines That Have Collapsed, Filed for Bankruptcy And/Or Suspended Operations So Far
- Trans States Airlines
- Compass Airlines
- Virgin Australia
- Avianca (Colombia)
- Flybe (UK)
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What Airlines Are Publicly Traded?
- The Airline stocks list with publicly traded stocks are as follows:
- $LUV
- $DAL
- $AAL
- $UAL
- $SAVE
- $ALK
- $SKYW
- $JBLU
One Airline Company Bucking the Trend
It’s not all doom and gloom, however. One airline company, Cargojet (TSX: CJT), actually saw their revenue increase despite the pandemic.
As you probably figured out by the name, Cargojet transports cargo (goods), not people. Not only has Cargojet survived this global crisis, but they’ve also thrived, realizing a 12% revenue increase last quarter. If that wasn’t enough, they saw a 51% increase in gross margin along with a 24.5% increase in adjusted earnings. You can thank e-commerce for that.
What else is someone going to do while stuck at home? Shop of course. How long will Cargojet sustain these revenues? Your guess is as good as mine but we’d likely see a decline once stores open up.
One Critical Thing to Consider When Investing in an Airline Stocks List
Balance Sheet Strength
Balance sheets are important for many reasons. For starters, a balance sheet shows the assets and liabilities the company owns at a certain point in time.
As a potential investor, you need to consider the financial stability of a company. You want to ensure the company is making money, protecting the money it’s making and not hemorrhaging it.
“The Numbers Don’t Lie”
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Balance Sheet Strength Is Critical
As you can see in the image above, Southwest and JetBlue lead the pack in regards to the strength of their balance sheets. Coming in at a close 3rd is Alaska.
By contrast, American Airlines carries the biggest debt load and is the least profitable airline in the industry. Although they have a substantial cash reserve, I’d be concerned as a shareholder if the skies don’t open up come summer.
Along the same token, Southwest Airlines, JetBlue Airways, and Alaska Air all have at least a billion in the bank to access if needed. Take Southwest, for example; their liquidity equals 28% of their 2019 revenue. Likewise, JetBlue is 22%, while Alaska has 23%.
In short, even though Southwest, JetBlue, and Alaska could experience short-term losses, they should have enough capital to weather the COVID-19 storm.
Airline Stocks Soared in Price Last Week
We got some positive news as of late. Airline stocks soared in price last week with shares of American Airlines, rising 41% to close at $16.72.
To put that in perspective, that’s their biggest one-day percentage gain since their merger with US Airways in 2013. Even though the shares are still down 42%, it looks promising none the less.
Industry analysts point to their aggressive plans to operate 55% of their flights from July 2019 for the spike. Considering this is a considerable increase over the 20% they ran in April and May, I would tend to agree.
United Airlines, on the other hand, had a slightly less aggressive approach, resuming about 130 nonstop routes. With this came a 16% rise in share price at the close. Obviously, both will be running much smaller operations like their competitors.
Check out our live trade made on American Airlines.
Final Thoughts
The question remains: Is it time to buy the dip on an airline stocks list? Even though it appears the airline industry has crashed, people still want and need to travel far and wide.
Unless we invent some miraculous time travel device, they will be using airplanes to do so. Once the global travel bans are lifted, people will be scrambling to hop on a plane. Eventually, in response to the soaring demand, stock prices will recover, and all will be well.
Although it may be quite tempting to get in on the low prices, it may take a while to reach the all-time highs the airline industry got so used to.
I believe it’s safe to buy airline stocks right now, as long as you understand the risk. Only time will tell when the skies will be reopening fully. It’s best to stick to top operators with strong balance sheets.
Personally, I feel they have the best chance of surviving in the event something goes wrong in the vaccine chase, and the pandemic is with us longer than we hope.
