Top 3 Airline Stocks to Watch

Roberto Rivero

Few industries have 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.

Covid-19, Travel Restrictions and the Future

The aviation industry ground to a halt in 2020 amidst various travel restrictions imposed around the globe in the face of the coronavirus pandemic. Airline stocks reacted accordingly and plunged due to the lack of demand for flights.

At the time of writing, global vaccination drives are underway in most developed countries, with varying degrees of success. Israel, the United States and the United Kingdom, in particular, have made good progress in percentage terms of population vaccinated. 

These positive developments have begun to boost peoples’ hopes that a return to normality is on the horizon and that, perhaps, foreign travel will soon be possible.

However, it is important to note that, as we have seen many times over the past year, when it comes to the pandemic, things can change very quickly. So in the short term, we can expect airline stocks to be particularly sensitive to any news which may cause further delay to the easing of travel restrictions.

This increased volatility in the short term will likely present opportunities for some traders to attempt to profit from both rising and falling airline stocks. In this article, however, we will focus on the long term prospects of airline stocks.

IAG Shares

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.

Depicted: Admirals (formerly Admirals) MetaTrader 5 - IAG Daily Chart. Date Range: 10 February 2020 - 15 April 2021. Date Captured: 15 April 2021. Past performance is not necessarily an indication of future performance.

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.

Depicted: Admirals MetaTrader 5 - IAG Weekly Chart. Date Range: 26 July 2015 - 15 April 2021. Date Captured: 15 April 2021. Past performance is not necessarily an indication of future performance.

EasyJet Shares

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.

Depicted: Admirals MetaTrader 5 - EasyJet PLC Daily Chart. Date Range: 10 February 2020 - 15 April 2021. Date Captured: 15 April 2021. Past performance is not necessarily an indication of future performance.

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.

Depicted: Admirals MetaTrader 5 - EasyJet PLC Weekly Chart. Date Range: 26 July 2015 - 15 April 2021. Date Captured: 15 April 2021. Past performance is not necessarily an indication of future performance.

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.

Depicted: Admirals MetaTrader 5 - UAL Daily Chart. Date Range: 6 February 2020 - 15 April 2021. Date Captured: 15 April 2021. Past performance is not necessarily an indication of future performance.

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.

Depicted: Admirals MetaTrader 5 - UAL Weekly Chart. Date Range: 19 July 2015 - 15 April 2021. Date Captured: 15 April 2021. Past performance is not necessarily an indication of future performance.

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:

  1. Sign up with Admirals
  2. Log in to your Trader’s Room account
  3. 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
  4. 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:

  1. Download MetaTrader 5
  2. Open the trading platform and log in using your Invest.MT5 account details
  3. 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’

Depicted: Admirals MetaTrader 5 - Symbols

  1. Locate the trading symbol in the ‘Market Watch’ tab, right click on it and press ‘Chart Window’ to open its price chart
  2. At the top of the screen, select ‘New Order’ to place an order 

Depicted: Admirals MetaTrader 5 - IAG - New Order. Date Range: 14 February 2020 - 15 April 2021. Date Captured: 15 April 2021. Past performance is not necessarily an indication of future performance.

Final Considerations

All investments carry a risk but, at this moment in time, investments in airline stocks probably represent a larger risk than in other industries. 

The future success of the industry and individual airlines depends greatly on the evolution of the pandemic over the following months. This is before factoring in other considerations, such as oil prices for jet fuel.

The three airline stocks highlighted in this article are merely examples of stocks which have suffered during the pandemic and have the potential to recover when lockdowns are eased. It is important that, before investing any of your own capital, you conduct your own research into the companies behind the stocks.

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:

  • Use of the world’s number one multi-asset trading platform, MetaTrader 5 at no extra cost
  • Exclusive access to our state of the art Premium Analytics tool, brought to you in partnership with Dow Jones to help analyse your potential investments
  • Opening an account with a minimum deposit of just €1

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The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:

  1. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.
  2. Any investment decision is made by each client alone whereas Admirals shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.
  3. With view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for prevention and management of conflicts of interest.
  4. The Analysis is prepared by an independent analyst Roberto Rivero, Freelance Contributor (hereinafter "Author") based on personal estimations.
  5. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.
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