Investors Get Ready for Takeoff 🛩

Table of Contents

Investors Get Ready for Take Off

Warren Buffett dumped his airline stocks last month. Little did he know the rocket fuel sitting underneath them. The US Global Jets exchange-traded fund (ETF) is on a 65-day inflow streak. It’s day trading central for bored millennials in lockdown!

Citibank believes every 1% impact on global travel has a 10% impact on airline profits. Many airlines used chapter eleven after 9/11. At that time, air travel dipped 30% for three months.  The sector owes governments big-time to still be in business right now. We face two years of <50% demand compared to 2019, according to the Civil Aviation Authority.

The market expects unlimited federal aid; there can be no other explanation for the recent stock surge. If you run a country, you need an airline as essential infrastructure, so governments have no choice but to grant bailouts. Airline investors are living on them!

However, the bear case for airline stocks is that this state funding needed to support multiple airlines for multiple years will be off the charts. It can’t be there for all carriers, and those get it will have no choice but to restructure under its weight. The capital structure for said airlines will reshuffle, and the state (the debtor) will take everything.

If the insiders are right, we’re months – not years – away from all the airlines you know going through this bankruptcy process (the third or fourth time for some). The better ones are on a slow path to nationalization. The less good ones are toasty.

The bulls in this space are betting on either a v-shaped recovery in air travel saving the day or governments deciding that selective aid isn’t fair. It could be that taxpayers’ money is offered in grants and no-recourse loans that keep everyone in business. All to come!

Share:
More Posts
From One Rock to Another 🚀

NASA’s OSIRIS-REx mission, after a seven-year journey, successfully captured and delivered asteroid samples.

Too Much Debt  💳

Rising credit card debt and delinquencies have created losses for credit card companies.

Get your daily Invstr Crunch

Get the market news and updates you need, delivered to your inbox or available on our daily podcast.

Risk Disclosure:

Invstr is not a bank and banking services are provided by Vast Bank, N.A.

Brokerage and Banking services are currently only available to U.S. residents.

Invstr app and web services are provided by Invstr Ltd. Advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC) details of which can be obtained here. Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value.

Investing involves risk and can lead to losses. Past performance does not guarantee future results.

Invstr app and web services are provided by Invstr Ltd. Invstr+ advisory services are provided by Invstr Financial LLC, an investment adviser registered with the Securities Exchange Commission (SEC). Securities brokerage and custody services are provided by Apex Clearing, a broker dealer registered with the SEC and a member of FINRA and SIPC. There is no bank guarantee on securities and securities may lose value. Vast Bank N.A. a nationally chartered bank and member of the FDIC, provides the banking products, including the products and services related to digital asset accounts. As with any asset, the value of Digital assets can go up or down and there can be a substantial risk that you lose money buying or holding digital assets. You should carefully consider whether trading or holding Digital assets is suitable for you in light of your financial condition. Your digital account does not support wallet to wallet transferring of your digital assets (i.e. cryptocurrencies) outside the platform. Any Digital Assets in your digital asset account are not insured by any government entities, including but not limited to FDIC or SIPC. The Invstr Visa® Debit Card is issued by Vast Bank, N.A. pursuant to a license from Visa U.S.A Inc and may be used everywhere Visa debit cards are accepted. Invstr Ltd, Invstr Financial LLC and Invstr Securities Ltd are subsidiaries of Marketspringpad Holdings (collectively “Invstr”) and Invstr is solely responsible for the application services and website content.

Watchlists provided when users first access the service are not a recommendation to invest. Instead they are provided to help users better navigate the service. Users are free to edit and create their own watchlists. From time to time, Invstr will suggest instruments solely based on an individual’s interest and the interest levels of the Invstr community. The statistical and portfolio builder models generated by Invstr do not reflect actual investment results and are not guarantees of future results. Comments provided by Invstr leaders, influencers or members of the Invstr Community are not recommendations and should not be construed as such. Invstr does not endorse the content or the positions posted by them. Their investment approach, and that of the models provided by Invstr, may be different from yours and may not be appropriate for you.