Are US Airline Stocks Worth Buying?

Airplane stocks in the US

Author: Tim Phillips

August 25, 2020

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Airlines around the world have had an awful year as Covid-19 grounded planes and brought international travel to a halt.

There was some respite yesterday for both American Airlines Group Inc (NASDAQ: AAL) and United Airlines Holdings Inc (NASDAQ: UAL), with their shares finishing up strongly 10.5% and 9.9% respectively.

Reports that President Trump could soon (by October) give the go-ahead for an experimental vaccine being developed by AstraZeneca boosted sectors that have been hammered thus far by the Covid-19 pandemic. 

For example, American Airlines posted revenue that was down an eye-watering 86.4% in the second quarter of 2020. 

Although air traffic has rebounded from March and April, with domestic flights operating a trimmed-down schedule, it’s still around 70% off levels from a year ago.

American and United were boosted by the latest optimism given their higher debt loads but the initial good news should be taken with a grain of salt for long-term investors as airlines still remain one of the most risky sectors to be in right now.

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About the Author: Tim Phillips

Tim, based in Singapore but from Hong Kong, caught the investing bug as a teenager and is a passionate advocate of responsible long-term investing as a great way to build wealth. He has worked in various content roles at Schroders and the Motley Fool, with a focus on Asian stocks, but believes in buying great businesses – wherever they may be. In his spare time, Tim enjoys running after his two year-old son, playing football and practicing yoga.