COVID-19 has badly impacted the airline industry
There have been very significant passenger number falls that have resulted in some planes even flying empty between airports. As a consequence, revenues have been badly impacted. On top of this aircraft, manufactures have also had to reduce their workforce and production schedules. Airbus for example has reduced its wing production on factories in Broughton, Filton, and Bremen. Boeing has also dropped employees along with General Electric following suit. Rolls Royce is planning to drop around 9,000 jobs primarily from its civil aerospace sector in Derby in the UK.
However, is the worst now behind?
Although airlines share prices are still trading near their four-month lows, analysts are starting to look past the pandemic. There are signals that there is an earnings rebound on the way. It is worth being aware that airlines, unlike some other sectors, are likely to rebound quite strongly after COVID-19. Holiday makers, travel for family, and work-related trips can all be reasonably expected to rebound to very similar pre-COVID19 levels. If you look at the chart below you can see that Earnings Per Share are starting to pick up (blue line) in relation to airlines share prices.
So, this could be the time to pick up a bargain airline stock for the long haul for your portfolio.