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.
This material is categorised as non-independent for the purposes of CGS-CIMB Securities (Singapore) Pte. Ltd. and its affiliates (collectively “CGS-CIMB”) and therefore does not provide an impartial or objective assessment of the subject matter and does not constitute independent research. Consequently, this material has not been prepared in accordance with legal requirements designed to promote the independence of research. Therefore, this material is considered a marketing communication.
This material is general in nature and has been prepared for information purposes only. It is intended for circulation amongst CGS-CIMB’s clients generally and does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this material. The information and opinions in this material are not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, derivative contracts, related investments or other financial instruments or any derivative instrument, or any rights pertaining thereto. CGS-CIMB have not, and will not accept any obligation to check or ensure the adequacy, accuracy, completeness, reliability or fairness of any information and opinion contained in this material. CGS-CIMB shall not be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or usage thereof.
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.