News about the Omicron variant of the coronavirus rattled U.S. airlines and travel-related stocks this week, with headlines about the resurgence of travel bans in several countries during the relatively strong Thanksgiving travel season. It led to concerns about the recovery of the industry.
The World Health Organization designed Omicron as a “variant of concern” on Friday as the United States and several others have imposed travel bans from countries in southern Africa.Organization Facilitated a “gentle, coordinated and consistent” world response to variants As research is underway to better understand mutations.
Stocks from major US airlines initially showed some resilience, but were hit hard by the sale on Tuesday. US Global Jet ETF
With a loss of just over 3% this week, stocks of US airlines such as United Airlines Holdings are exposed to overseas travel.
And American Airlines Group, Inc.
According to the report, the travel ban was properly applied as US travelers took off domestic flights at about the same pace as in 2019. TSA checkpoint data. Travel to Europe, which benefited from the reopening of the transatlantic market in early November, declined even before the Omicron news, as some European countries were suffering from a wave of COVID-19 increases. bottom.
Baird analyst Peter Arment said in an interview that Omicron represents “a minor mess at the moment” and the path this variant may follow in high-vaccination countries is unclear. Stated.
So far, the turmoil is similar to what was initially caused by the Delta variant, and domestic travel is likely to be on track, but the headline encourages postponement of spring travel plans. There are concerns that it may be possible.
In a note to customers, Jeffreys analyst Sheila Kahyaogle said a 20% drop in US airline stocks in June and July was linked to concerns about delta variants. rice field.
“I don’t think we’ll see the same decline in this outbreak, as stocks were already trading at the lowest levels since February 2021,” she said.
If Omicron spreads like the Delta, it will impact travel and demand, but that doesn’t change medium-term expectations for US airlines, Kahyaogur said.
“We continue to believe that airline balance sheets are not at risk and we can navigate the impact of variants on air travel.”
Among US airlines, Kahyaogur said he favored Delta Air Lines.
“Despite 15% exposure to transatlantic travel,” and Southwest Airlines Ltd.
Considering that the domestic exposure in the United States is about 95%.
“Domestic travel is driving the recovery of the U.S. travel industry,” said Peter McNally, a third-bridge analyst. “Omicron is influencing long-distance overseas travel to specific markets, at least for the foreseeable future.” Said.
“These markets are offered by wide-body aircraft that have just been redeployed to launch service. Aircraft can be redeployed as needed, and these wide-body aircraft have recently been affected by these. It has just been moved to the market that received it, “he said.
McNally expects American Airlines, Delta Air Lines and United Airlines to report fourth-quarter revenues 20% to 30% below the same period in 2019 through a partnership with JetBlue Airlines.
Pre-COVID pace and about 10% off Spirit Airlines Inc.
Expected to show full recovery.
“Major airlines need to close the gap between business and international travel before they see a full recovery in revenue,” he said.
One of the new challenges that has caused the pandemic is that it’s harder for airlines to plan because people are booking their trips with less advance time than before. And airlines face the same labor shortages and challenges as other service industries, he said.
US airlines will report Q4 results in late January.
According to analysts, US airlines may find that domestic travel acts as a cushion against varieties of Omicron.
http://www.marketwatch.com/news/story.asp?guid=%7B20C05575-04D4-B545-77AB-358E48E87F77%7D&siteid=rss&rss=1 According to analysts, US airlines may find that domestic travel acts as a cushion against varieties of Omicron.