Top 3 Airline Stocks to Watch
Few industries suffered as badly at the hands of the coronavirus pandemic as that of aviation. After enduring the most difficult of circumstances for the past year, worldwide vaccination drives are beginning to breathe optimism into this struggling industry ahead of summer in the northern hemisphere.
Airline stocks, which dropped sharply during the pandemic, might now appear to be an opportunity for some investors. In this article, we will take a look at three airline stocks to watch, as we hopefully begin to see a return to normality around the world.
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International Consolidated Airlines Group (IAG) was founded in 2011 after a merger between British Airways and Iberia - the flagship airlines of the UK and Spain respectively.
Since its inception, it has gone on to acquire four further airlines - British Midland International (BMI), Vueling, Aer Lingus and, most recently, Air Europa.
IAG endured a difficult 2020, with revenue falling almost 70% and net losses of more than €6.5 billion, according to its end of year results.
In March 2020, when Covid-19 spread around the globe and caused economic lockdowns, the IAG share price plummeted, falling still further in May. In September, IAG raised more than €2.7 billion in a rights issue, creating almost 3 billion new shares and, in doing so, caused the share price to reach its lowest levels since the company’s creation.
However, since reaching a low of 88.46 GBX at the end of October, the share price has recovered and is now trading above the 200 GBX level.
Thanks to the money raised in September’s rights issue, IAG has been able to stay safe, however, its future success and ability to regain pre-pandemic levels depends heavily on travel restrictions easing in the summer months.
EasyJet, which was founded in 1995, is a low-cost airline group based in the UK and operating throughout Europe. It runs a “no-frills” service, allowing it to offer passengers low fares by eliminating, or charging extra for, all unnecessary services.
According to its annual report, revenue fell 49% in 2020 and the company posted net losses of £1 billion compared to a net profit of £349 million the previous year.
In response to the pandemic, the company cut operating costs and raised funds from a sale and leaseback of a number of its aircraft. Moreover, like IAG, easyJet launched a rights issue to further shore up its cash reserves to help the airline ride out the effects of the pandemic.
After falling to an all time low of 403.90 GBX in March 2020, EasyJet shares are currently trading around the 1,000 GBX level.
Like IAG, EasyJet’s fortunes depend on an easing of travel restrictions in Europe during the summer months.
However, unlike IAG, EasyJet only operates short-haul flights, whose demand, provided travel restrictions are eased, are expected to recover more quickly than that of long-haul flights. Moreover, the low costs associated with EasyJet flights are likely to be more attractive to consumers after a tough year for the global economy.
United Airlines Shares
Delta Air Lines, founded in 1968, is a major US airline and one of the so called “legacy carriers”. It operates both domestically and internationally and one of the largest airlines in the world in terms of both revenue and passengers flown.
Its financial results from 2020 indicate almost a 65% drop in revenue and net losses of $7 billion compared with net profits of $3 billion the previous year. At the time of releasing last year’s results, United Airlines stated that it expects 2021 to be a transition year, focused on preparing for a recovery in operations.
According to the same results, since the beginning of the pandemic, United Airlines has raised over $26 billion in liquidity, allowing it to weather the storm that has been Covid-19.
After reaching a low of $17.73 in March 2020, the United Airlines share price has recovered and has been on an upward trend since the beginning of 2021, currently trading at around $55.
Unlike European countries, Covid-19 restrictions have not been as strict in the United States. Whilst demand for international travel will depend just as much on restrictions in place abroad as in the US, United Airlines also benefits from a large domestic market which is likely to recover much more quickly.
Investing in Airline Stocks With Admirals
With an Invest.MT5 account from Admirals, you can invest in all three of the airline stocks mentioned in this article and over 4,300 other shares!
In order to open an account, you will need to follow these steps:
- Sign up with Admirals
- Log in to your Dashboard account
- Press ‘Open Live Account’ and fill in the application form. Among other information, you will need to provide your contact details, tax information and passport number
- Verify your identity by uploading the requested documents to your account
Once you have completed the above steps, your application will be reviewed by Admirals and you will be notified of the outcome by email. If your application has been successful, you will also receive your Invest.MT5 account details by email.
In order to begin buying airline stocks, you will need to:
- Download MetaTrader 5
- Open the trading platform and log in using your Invest.MT5 account details
- Press Control + U and search for the stock you wish to purchase in the resultant window, as shown below. When located, press ‘Show Symbol’ and ‘OK’
- Locate the trading symbol in the ‘Market Watch’ tab, right click on it and press ‘Chart Window’ to open its price chart
- At the top of the screen, select ‘New Order’ to place an order
Invest With Admirals
An Invest.MT5 account allows you to purchase over 4,300 individual stocks from 15 of the world’s largest stock exchanges at competitive terms! Other benefits include:
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- Opening an account with a minimum deposit of just €1
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