From my perspective, there are good reasons to almost never own an airline stock.
The industry doesn’t make money. The investing saw is that over the sector’s history it has broken even–at best.
Airline stocks are extremely cyclical with swings from extreme optimism–My aunt Tilly has just booked 20 tickets for gifts to a family reunion–to utter despair–No one is ever, ever, ever going to fly again.
And the stocks are at the mercy of external factors such as the rise and fall of fuel costs.
But, when they come off a bottom, they come off fast and big.
And I think that’s what we’re going to see over the next few quarters of 2022. Which means it’s time to buy.
I could be early but the extreme volatility of stocks in the sector means that if you wait too long, you’ll miss the juiciest gains.
Tomorrow, February 1, I’ll be adding shares of Delta Air Lines (DAL) to my JubakPicks Portfolio with a target price of $46. That’s just below the 200-day moving average and slightly further below the March 7, 2021 high of $49.83 highlighted in my last revision of the Dip-O-Meter posted this morning, January, 31, on my subscription JubakAM.com site.
Bank of America released their airline bookings update recently. Airline booking trends have now improved for three straight weeks as anxiety of over the impact of the Omicron COVID variant fades with consumers.
Bookings are still way, way below pre-Pandemic figures. But they are improving.
Bookings fell 54.8%. compared to the 2019 level for the week ending January 23 vs. the -60.3% mark recorded the prior week.
Domestic and international booking volumes improved to down (domestic) 27.4% vs 2019 (against down 30.4% versus 2019 in the prior week) and down (international) 39.7% vs 2019 (vs down 44.0% in the prior week.)
Similarly, domestic leisure (tickets sold through OTA channels) improved modestly to down -16.1% vs 2019 (vs -17.7% last week). A positive sign is that pricing improved in the aforementioned channels by approximately 4-5% pts from last week, which is an improving sign after pricing dropped to start the year.”
Corporate bookings are also rebounding with bookings through large travel agencies and small travel agencies down 54.1% vs. 2019 and down -22.3% vs 2019.
Shares of Delta gained 3.68% today to close at $39.69.
