Cargo Airlines Continue to Fly to China


Cargo Airlines Continue to Fly to China

The Coronavirus has certainly shaken the aviation industry over the last few weeks. The first companies to see an immediate affect was the commercial airlines. With restrictions of travelling within certain areas of China in addition to tourism rates dropping down due to lack of demand the airlines quickly experienced some fear in the market.

To date there has close to 600 deaths confirmed by China due to the Coronavirus. There has been over 30,000 confirmed cases of the virus reported from the local authorities.

Some of the major concerns that the airlines have regarding travelling into China have been not only with the passengers but also with the crew. Many crew members have voiced how they feel uncomfortable flying into China based on the conditions present.

UPS’ (NYSE: UPS) pilot union came to an agreement with the company allowing pilots to be able to make the decision on if they will be operating a flight travelling in or out of China. Should they decide they do not feel comfortable flying into the location they are able to take a personal day of leave on any flight leg that is flying through China.

Many of the senior cargo airline pilots have had experience of operating relief flights into sensitive areas thus are a bit more experienced with the situation.

 Cargo pilots want the ability to decide whether to accept assignments to China. (Photo Credit: Flickr/G B_NZ)

Atlas Air Worldwide up 9% Today

Within the first 30 min of the day we have seen Atlas Air Worldwide Holding (NYSE: AAWW) rise up over 9% to then start to slowly settle down from the peak.

Part of the reason behind the uptick of the company’s stock lies with the idea that more relief supplies will need to be sent into China. Traditionally cargo airlines are flying from China with full payload to then bring cargo out to locations around the world.

Due to the current situation in China many flights are operating into China carry cargo in from other locations. Since commercial airlines are not permitted to land into certain airport, the supplies will need to be brought in on cargo aircraft.

With Atlas Air having one of the largest fleets of B747 flying this is incredibly attractive for cargo brokers who are looking to quickly bring supplies into China.

Although we are seeing price start to settle down after the initial peak there is still potential for the stock to continue to rise.

Technical Analysis

Atlas Air’s Stock was trading at a up around $50 back in the year 2019. With trade war tension between China and the United States it brought the price of the stock down with the fear and uncertainity of the results of the deal.

Now that we have come down to the low $20 range we have been trading sideways for quite some time now. There is now some slightly positive news for Atlas. Although the new of the virus outbreak for the global economy is a major issues, the short term benefit for Atlas in terms of business will be significant.

During a time of year where business is traditionally slower for cargo airlines, having a surge of demand for cargo airline operations will in result aid the growth of the stock by bringing in more revenue.

Until price is able to break above the previous resistance level we can not be certain that price will continue to trend up higher. Price has been stuck below the resistance level for a great amount of time. There will need to be significant strength and volume to push the price of the stock up above the price level before we can confirm the progress.

Take your time when conducting your research and analysis. I personally prefer to conduct my own market research after hours when the market news has settled in. This allows me to be able to enter the new trading day fully prepared thanks to my due diligence the night before. I initially would try to wake up early and cram in all my research in the morning before the market would open and always found myself feeling rushed.

Looking forward to watch how the Cargo Airline industry responds to the increased in demand. Until then stay soaring and happy trading!

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As a disclaimer all trade ideas are for education purposes and not meant to be used as financial advise. All investing involve risks, including loss of principal. Past performances do not guarantee future results or success. Stock and Forex markets are volatile and can decline significantly in response to adverse regulatory, market, economic development. Asset allocation and diversification do not eliminate risk. All Content is used for illustrative purposes and for educational use only.

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