Despite the summer months the airline sector has not managed to get back on track
Today we start September after a summer of continued vaccination rollouts in Europe and the gradual improvement of mobility between European countries. This relaxation of travel restrictions has caused an increase in tourism and, with it, the number of flights. However, the number of flights operating remains far lower than pre-pandemic levels.
Despite this reopening, the airline sector has not managed to get back on track. This is largely due to the outbreak of the Delta variant and its rapid spread - which is inflicting damage on the tourism sector due to the reduced effectiveness of current vaccines against this variant.
At the moment, although obstacles remain ahead, the future prospects of this sector are fairly positive as the evolution of the pandemic continues to improve and the results of these companies also begin to improve little by little as the number of flights increase.
Below is the weekly chart for popular Norwegian airline "Norwegian Air Shuttle". For several years it has maintained a strong downward trend, falling more than 97% over the past year due to both the pandemic and problems derived from the purchase of a series of aircraft in 2012 from Airbus.
Depicted: Admirals MetaTrader 5 – Norwegian Air Shuttle Weekly Chart. Date Range: 13 April 2008 – 1 September 2021. Date Captured: 1 September 2021. Past performance is not a reliable indicator of future results.
Five year evolution of share price:
- 2020: -97.70%
- 2019: -62.16%
- 2018: -1.12%
- 2017: -38.68%
- 2016: -11.34%
This decline meant the company had to carry out a deep restructuring and also received much needed aid from the Norwegian state which provided some relief.
Yesterday, the company reported that during the first half of the year it obtained a net profit of 155 million euros despite the fact that its main European routes remain affected by the pandemic. Despite this, the company expects that during the second half of the year the rebound in travel will continue and its current fleet will be fully utilised by the end of the year.
However, during today's session, we learned that the Swedish airline "Scandinavian Airlines Systems (SAS)" has reported a net loss of 573 million euros in the first 9 months of its fiscal year (which begins in November).
Furthermore, on Monday, the European Union agreed to reimpose restrictions on transatlantic flights to the United States due to the increase in coronavirus infections. This decision caused widespread falls in the sector, the main recipient of which was the Spanish-British conglomerate IAG that includes Iberia and British Airways.
As in the case of Norwegian, if we look at the weekly chart, IAG suffered a sharp decline caused by the pandemic. However, after marking historical lows towards the end of last year, the IAG share price has been gradually climbing, confirming the positive divergence in its MACD indicator. Unfortunately, however, the summer has not been positive. Since June, IAG has fallen 21.5% in the stock market.
Depicted: Admirals MetaTrader 5 – IAG Weekly Chart. Date Range: 11 January 2015 – 1 September 2021. Date Captured: 1 September 2021. Past performance is not a reliable indicator of future results.
If we look at the daily chart, we can see how this company has lost the important level of support/resistance represented by the green line, thus continuing the downward trend started at the annual highs.
It is important that the price maintains its current support level at 155 GBX, as the loss of this level could open the doors to a major correction until the next support level in the red stripe.
Depicted: Admirals MetaTrader 5 – IAG Daily Chart. Date Range: 20 April 2020 – 1 September 2021. Date Captured: 1 September 2021. Past performance is not a reliable indicator of future results.
Five year evolution of share price:
- 2020: -61.40%
- 2019: 1.20%
- 2018: -5.07%
- 2017: 47.65%
- 2016: -27.78%
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