Airline Stocks Down as International Travel Demand Drops
We have yet another day in the U.S. Stock market where we are down significantly for the day. Last week we experienced a market drop that occurred dramatically sudden and sharp. We all played a large role in that crash of the market. As the fear revolving the Covid-19 outbreak individuals stopped travelling as much internationally unless it was required.
We started to see hotels and casinos around the pacific begin to close in aims to help contain the virus. For those who are watching the news or reading financial market publications all have been well kept up to date with the current status of the outbreak.
We have seen countless reports form airlines and other service companies dropping down their forecast for the year looking to essential allow this virus to be stabalized before creating proper forecast for the year to come.
Some organization have been relatively untouched by the outbreak as various cargo airlines that are still capable of operating into many airports are seeing a surge in demands for medical supplies to be flown around the world.
When we look at the airlines in the industry the ones that are seeing some of the largest downturn are American (AAL) which is down just over 43% since Feb 12th. That is an incredible decrease in valuation over such a short period of time.
We see Alaska Airlines (ALK) down over 30% in the same time frame. Spirit Airlines (SAVE) although they fly primarily domestic is experiencing roughly a 46% drop in price over the last 2 weeks. To say that the airlines are experience a bit of a pullback would be an understatement.
Those who did not appropriately protect their assets during this recent drop in the market essential has lost upwards potential 50% of their unrealized gains from the last 2 weeks. That is a scary number to be down in unrealized gains in just a short period of time. This is why watching the volatility index is a valuable tool that is extremely important to keep an eye on when you have exposure to the stock market.
Aerospace stocks up this week
With so much negativity in the news this last week we went on the search to find which stocks in the aerospace industry were up this last week. It took some time to search through the sea of companies that are down from last week but we managed to find three aerospace companies that were positive last week.
The only 3 stocks that were up in price value last week were an aircraft leasing company, an aircraft maintenance and repair operator and a cargo/aircraft leasing company. Knowing that all the airlines were down from lack of international travel it was interesting to see these companies still holding their worth in such troubling times.
Fly Leasing (FLY)
Fly Leasing (FLY) is a very low priced stock with shares trading currently under $20. The stock has gone up towards the range just under $24 before experiencing some weakening consumer confidence as earnings did not come out as strong as investors has anticipated.
Now after having a strong 4th quarter earnings report optimism has risen. As more airlines are looking to the opportunities that lie with leasing aircraft Fly Leasing is looking to provide to the commercial airline industry new and efficient aircraft. For the long term Fly Leasing has incredible potential for growth as price is currently low and they have shown their ability in generating profits as a company.
Heico Corporation (HEI) operates maintenance facilities around the world. With international travel slowing down currently many airlines are using the opportunity to complete vital maintenance checks. This is a great time to be able to take the aircraft out of service to compete either a A or C check on the aircraft.
Being that demand is low this allows for airlines to focus on preparing for when demand increases again. Although in terms of cash flow for the airlines this is bad for repair facilities such as Heico this is great new. With a surge of clients requesting services around the world Heico has experienced an increased in demand for services.
This is aiding in the quick and rapid spike up from the market drop for Heico. Although it is difficult to dertermine if the spike up is signally strength in the opportunity or just a market tactic to pump up the price before dumping more share.
Atlas Air Worldwide (AAWW)
Finally, Atlas Air Worldwide (AAWW) has been a lot for investors to process. After reporting a very poor last year with a net loss for the year many investors began to loose optimism for the company. Although as travel has seized to certain airport in china, Cargo airlines are still permitted to operate under certain criteria being met.
With the demand for supplies, medical evacuation, and relief flights atlas air with their large fleet of B747 readily available was able to fulfill the demand. Personally watching the news channels I have seen their aircraft operating many of the relief flights covered by the media. For the airline although the situations are tough they are continuously finding new ways to remain competitive in the charter airline market.
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