What happened
Wednesday turned out to be a great day to own airline shares, with major airlines like Delta airlines (NYSE: DAL) flying to close the day with double-digit percentage gains, or nearly. At the end of the trade, Delta shares rose 9.5%.
As the day progressed, even airlines like Alaska Air Group (NYSE: ALK) and Hawaiian Holdings (NASDAQ: HA), who initially looked like they were going to sit outside the rally, managed to get on board and find a seat. At the close of the bell, Alaska Air rose 9.2% and Hawaiian posted a 10.9% gain.
Aircraft manufacturer Boeing (NYSE: BA) put on a strong demo too. Up to more than 5% at one point, Boeing shares closed the day with a 4.4% increase.
Image source: Getty Images.
And that
Probably the main driver of current earnings for airline stocks was biotechnology Modern‘s (NASDAQ: MRNA) Announcement of their new coronavirus mRNA-1273 vaccine: The latest analysis of phase 1 clinical trials conducted through March shows that 100% of participants tested, over a range of doses, ended up producing antibodies against the coronavirus.
Moderna’s announcement is being taken as an early sign that it might soon be safe for people to travel again, specifically by air. Such a revival of air travel would also revive Boeing’s demand for new aircraft.
Now what
Even before the Moderna vaccine is proven to be safe and effective (phase 2 trials are ongoing, and phase 3 trials will begin in two weeks), the airline industry is working hard to get travelers back to the planes. Today, The Wall Street Journal reported on “a major push to build trust among travelers,” through which airlines argue that planes are actually safer being inside buildings, by virtue of the “rapid ventilation” of the planes, the “significant filtering” and the “constant infusion of fresh air” from the outside.
So far, people don’t seem to be buying into these arguments. In Delta’s earnings report on Tuesday, CEO Ed Bastian noted that passengers are not lining up for new flights as fast as their airline expected, and that Delta will delay reintroducing flights to match the least expected customer. demand.
Delta is also projecting that September air traffic will be only around 25% of what it was a year ago, and that it could take “more than two years before we see a sustainable recovery” in overall air travel, while Business travel (the most lucrative type for airlines) may never again be what it once was.
That is a disturbing forecast. Luckily for airline stock owners, more people We hear Modern today.
