US airline industry experienced a jump in demand after the US started its vaccine rollout. More than 1 million daily passengers are boarding on planes for the past weeks according to TSA. According to Jefferies, a financial services firm, we could be seeing airline stocks skyrocket by 70% this year.
Jefferies outlined its outlook on the industry on Tuesday after seeing a collective 30% jump in airline stocks. COVID19 vaccinations and fiscal stimulus are among the things that may have triggered such jump. The financial services firm wrote that “2023 looks very similar to 2019”. It also added that domestic flights are fully recovered while international flights are slowly “returning to pre-COVID levels”.
S&P 500 Airline Index jumped by 3% on Tuesday to make a 31% jump this year alone. US Global Jets ETF, on the other hand, has jumped by 21% so far this year.
Jefferies also raised its price target on some major airline stocks. For Delta Air Lines, Jefferies sees it reaching $50 from $40. On the other hand, Southwest Airlines could reach $70 from $55 and United Airlines shares reaching $60 from $55.
Airline Industry’s Optimism
Different airlines are also doing different strategies to meet the demands of potential passengers. Delta Air Lines will offer their middle seat once again. During the pandemic, Delta was among the airlines that opted not to sell the middle seat to ensure social distancing within their cabin.
Alaska Airlines is also looking to expand its fleet. Alaska Airlines invested in 23 new Boeing 737 Max. This is in preparation for the number of travelers who are ready to travel as more Americans are vaccinated daily.
On Thursday, Frontier Airlines is also hoping to raise $570 million via public trading. Its share is priced at $19. Frontier CEO Barry Biffle thinks that people with money are looking to travel again.
Frontier’s CEO isn’t the only one with a positive outlook in the recent surge in air travelers. United Airlines CEO Scott Kirby even thinks that leisure travel for domestic has almost recovered.
