Tailwind for airlines: how to pick the right stock
Airlines from Cathay Pacific to Wizz Air are benefitting from strong travel demand and higher fares, but which ones will benefit from the post-pandemic tailwind most? IGTV’s @AngelineOng investigates
"The pandemic years are behind us’’
says IATA’s Willie Walsh, and looking at Cathay Pacific’s shares, you’d be inclined to agree.
Cathay Pacific shares soar
Cathay Pacific Airways Ltd hit a 5-month peak, bucking the overall trend for the Hang Seng index, weighed by a hawkish US Federal Reserve and concerns over whether this will snuff out a nascent global recovery.
Hong Kong’s flagship carrier is expecting its first half year profit in three years.
Not only did it benefit form a one-off gain from a stake sale in Air China Ltd, but travel demand is rebounding in a big way.
Global airlines double profit forecast
Global airlines have more than doubled their forecast for the sector’s profit in 2023.
Flagship carriers and budget airlines like Wizz Air Holdings Plc, Ryanair Holdings PLC (LSE) and easyJet PLC are all reporting strong bookings and higher summer fares.
Pick stocks that can ‘cope’
However, it could all turn south, if airlines do not manage this spike in travel demand.
Orders for planes are piling up. IATA says members are complaining of having to wait 6 months or more for a delivery. Airbus Group NV (FR) and Boeing Co (All Sessions) say supply chains are to blame and reiterate there is no quick fix.
So, be picky when choosing airline stocks, look for those that are able to cope with rising travel demand.
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