3 Airlines Stocks to Gain as the Economy Looks to Fully Reopen
The aviation industry in the United States took a hit in 2020 as the COVID-19 pandemic raged on. Still, the situation will change as the introduction of vaccines has started in the country. Flight operations are gradually returning to normal and appropriate COVID-19 test rules apply. In fact, the number of passengers has increased and "exceeded 1 million a day" on the weekend before Christmas, according to an article in the New York Times.
In addition, Moderna, Inc. MRNA stated that it expects its vaccine to be effective against the new strain of the virus reported in the UK, as mentioned in a Reuters article. The article also mentioned that the company will conduct further testing to confirm this. In a press release, the company also mentioned that it had received Health Canada approval to use its vaccine in Canada.
Separately, Pfizer Inc. PFE and BioNTech SE BNTX announced in a press release that the companies have reached another agreement with the US government to supply an additional 100 million doses of their vaccine. This deal will bring the total number of cans to be shipped to 200 million, which the companies are expected to drop off by July 31, 2021. This will allow 100 million people in the US to be vaccinated. In addition, the companies received approval for their vaccine from the European Union (“EU”), as mentioned in another press release. The companies are ready to ship the first doses of the vaccine to 27 EU member states.
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In the meantime, the aviation industry is also hoping for additional stimulus from the government. As part of the $ 900 billion bipartisan coronavirus aid, U.S. airlines are set to receive $ 15 billion to pay their workers, according to a CNBC article.
Such positive developments are sure to give US airlines a boost in the coming days. When the vaccination process begins, flights should be able to resume operations on a larger scale. International flights can also return to normal together with domestic flights, provided the relevant test regulations are observed. In fact, the International Air Transport Association ("IATA") announced in a press release on November 24th that global passenger numbers will be estimated at around 2.8 billion in 2021 after an expected drop to 1.8 billion in 2020, which is a year-on-year decrease of almost 61%. In addition, IATA expects US airlines to "benefit from an earlier recovery in the US domestic market". IATA also said US airlines "have already restructured more extensively than other regions that supported their industry-leading financial performance before the crisis".
3 stocks to see
With the spread of the vaccine rampant along with an expected tax relief, the U.S. aviation industry is sure to begin its recovery path. This makes it a good time to keep an eye on the names of the airlines that will benefit from this development going forward. We have selected three such stocks that carry a Zacks Rank 3 (Hold). The full list of today's Zacks # 1 Rank (Strong Buy) stocks can be found here.
Mesa Air Group, Inc. MESA acts as the holding company for Mesa Airlines, Inc., which serves regional airlines under capacity purchase agreements with American Airlines and United Airlines. The Zacks consensus estimate for the company's earnings for the current year rose 41% over the past 90 days. The company's expected earnings growth rate for the next year is more than 100%.
Southwest Airlines Co. LUV operates a passenger airline that provides scheduled flight services in the United States and nearly international markets. The Zacks consensus estimate for the current year’s earnings has improved 4.4% over the past 60 days. The company's expected earnings growth rate over the next 5 years is 6%.
Spirit Airlines, Inc. SAVE offers low-cost airlines with around 600 daily flights to 77 destinations in the United States, the Caribbean and Latin America. The Zacks consensus estimate for the current year’s result has improved by 8.1% over the past 60 days. The company's expected earnings growth rate for the next 5 years is 12.5%.
Zack's top 10 stocks for 2021
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Southwest Airlines Co. (LUV): Free Stock Research Report
Pfizer Inc. (PFE): Free Stock Research Report
Moderna, Inc. (MRNA): Free Stock Research Report
Spirit Airlines, Inc. (SAVE): Free Stock Research Report
Mesa Air Group, Inc. (MESA): Free Stock Research Report
BioNTech SE Sponsored ADR (BNTX): Free Stock Analysis Report
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