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3 Airlines Stocks to Gain as the Economy Looks to Fully Reopen
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The airline industry in the United States took a hammering in 2020 as the COVID-19 pandemic raged on. Nonetheless, the situation is set to change as vaccine rollout has started in the country. Airline operations are gradually returning to normalcy with proper COVID-19 testing rules in place. In fact, the number of passengers has been on the rise, “topping 1 million a day on the weekend before Christmas,” as mentioned in a New York Times article.
Moreover, Moderna, Inc. (MRNA - Free Report) stated that it expects its vaccine to be effective against the new virus strain that was reported in the U.K., as mentioned in a Reuters article. The article further mentioned that the company will conduct more tests in order to confirm the same. Meanwhile, the company also mentioned in a press release that it has received authorization from Health Canada for use of its vaccine in Canada.
Separately, Pfizer Inc. (PFE - Free Report) and BioNTech SE (BNTX - Free Report) also announced in a press release that the companies have reached another agreement with the U.S. government to supply an additional 100 million doses of their vaccine. This deal brings the total number of doses to be delivered to 200 million which the companies expect to deliver by Jul 31, 2021. This will allow 100 million people in the United States to be vaccinated. Moreover, the companies also received authorization from the European Union (“EU”) for their vaccine, as mentioned in another press release. The companies are ready to ship initial doses of the vaccine to 27 member states of the EU.
Meanwhile, the airline industry is also hopeful of receiving additional stimulus from the government. Under the bipartisan $900 billion coronavirus relief aid, U.S. airlines are expected to receive $15 billion to pay their workers, as quoted in a CNBC article.
Such positive developments are sure to lift U.S. airlines in the coming days. As the inoculation process picks up, flights should be able to resume operations on a larger scale. International flights can also start getting back to normal along with domestic flights given proper testing regulations are maintained. In fact, the International Air Transport Association (“IATA”) stated in a press release on Nov 24 that global passenger numbers are estimated to grow to around 2.8 billion in 2021 following an expected slump to 1.8 billion in 2020, down almost 61% on a year-over-year basis. Moreover, IATA expects U.S. airlines to “benefit from an earlier recovery in the US domestic market.” IATA also said that U.S. airlines have “already restructured more extensively than other regions which supported their pre-crisis industry-leading financial performance.”
3 Stocks to Watch
As distribution of the vaccine picks up along with an expected fiscal relief, the U.S. airlines industry is sure to begin its recovery path. This makes it a good time to keep an eye on airline names that stand to benefit from this development going forward. We have selected three such stocks that carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mesa Air Group, Inc. (MESA - Free Report) operates as the holding company for Mesa Airlines, Inc. that provides regional air carrier services under capacity purchase agreements with the American Airlines and the United Airlines. The Zacks Consensus Estimate for the company’s current-year earnings increased 41% over the past 90 days. The company’s expected earnings growth rate for next year is more than 100%.
Southwest Airlines Co. (LUV - Free Report) operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets. The Zacks Consensus Estimate for its current-year earnings improved 4.4% over the past 60 days. The company’s expected earnings growth rate the next 5 years is 6%.
Spirit Airlines, Inc. (SAVE - Free Report) provides low-fare airline services, operating approximately 600 daily flights to 77 destinations in the United States, the Caribbean and Latin America. The Zacks Consensus Estimate for its current-year earnings improved 8.1% over the past 60 days. The company’s expected earnings growth rate for next 5 years is 12.5%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Image: Shutterstock
3 Airlines Stocks to Gain as the Economy Looks to Fully Reopen
The airline industry in the United States took a hammering in 2020 as the COVID-19 pandemic raged on. Nonetheless, the situation is set to change as vaccine rollout has started in the country. Airline operations are gradually returning to normalcy with proper COVID-19 testing rules in place. In fact, the number of passengers has been on the rise, “topping 1 million a day on the weekend before Christmas,” as mentioned in a New York Times article.
Moreover, Moderna, Inc. (MRNA - Free Report) stated that it expects its vaccine to be effective against the new virus strain that was reported in the U.K., as mentioned in a Reuters article. The article further mentioned that the company will conduct more tests in order to confirm the same. Meanwhile, the company also mentioned in a press release that it has received authorization from Health Canada for use of its vaccine in Canada.
Separately, Pfizer Inc. (PFE - Free Report) and BioNTech SE (BNTX - Free Report) also announced in a press release that the companies have reached another agreement with the U.S. government to supply an additional 100 million doses of their vaccine. This deal brings the total number of doses to be delivered to 200 million which the companies expect to deliver by Jul 31, 2021. This will allow 100 million people in the United States to be vaccinated. Moreover, the companies also received authorization from the European Union (“EU”) for their vaccine, as mentioned in another press release. The companies are ready to ship initial doses of the vaccine to 27 member states of the EU.
Meanwhile, the airline industry is also hopeful of receiving additional stimulus from the government. Under the bipartisan $900 billion coronavirus relief aid, U.S. airlines are expected to receive $15 billion to pay their workers, as quoted in a CNBC article.
Such positive developments are sure to lift U.S. airlines in the coming days. As the inoculation process picks up, flights should be able to resume operations on a larger scale. International flights can also start getting back to normal along with domestic flights given proper testing regulations are maintained. In fact, the International Air Transport Association (“IATA”) stated in a press release on Nov 24 that global passenger numbers are estimated to grow to around 2.8 billion in 2021 following an expected slump to 1.8 billion in 2020, down almost 61% on a year-over-year basis. Moreover, IATA expects U.S. airlines to “benefit from an earlier recovery in the US domestic market.” IATA also said that U.S. airlines have “already restructured more extensively than other regions which supported their pre-crisis industry-leading financial performance.”
3 Stocks to Watch
As distribution of the vaccine picks up along with an expected fiscal relief, the U.S. airlines industry is sure to begin its recovery path. This makes it a good time to keep an eye on airline names that stand to benefit from this development going forward. We have selected three such stocks that carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mesa Air Group, Inc. (MESA - Free Report) operates as the holding company for Mesa Airlines, Inc. that provides regional air carrier services under capacity purchase agreements with the American Airlines and the United Airlines. The Zacks Consensus Estimate for the company’s current-year earnings increased 41% over the past 90 days. The company’s expected earnings growth rate for next year is more than 100%.
Southwest Airlines Co. (LUV - Free Report) operates a passenger airline that provides scheduled air transportation services in the United States and near-international markets. The Zacks Consensus Estimate for its current-year earnings improved 4.4% over the past 60 days. The company’s expected earnings growth rate the next 5 years is 6%.
Spirit Airlines, Inc. (SAVE - Free Report) provides low-fare airline services, operating approximately 600 daily flights to 77 destinations in the United States, the Caribbean and Latin America. The Zacks Consensus Estimate for its current-year earnings improved 8.1% over the past 60 days. The company’s expected earnings growth rate for next 5 years is 12.5%.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 top tickers for the entirety of 2021?
These 10 are painstakingly hand-picked from over 4,000 companies covered by the Zacks Rank. They are our primary picks to buy and hold.
Start Your Access to the New Zacks Top 10 Stocks >>