Long Short Game with Airplanes
Howdy, I just watched Boeing's CEO interview starting that one of the US airlines could go bankrupt.
Fun game might be to: Go long on one airline and short on one.
For me long on Delta short on SouthWest. Let's see how this ages
It wasn’t a fact that some US airline was going bankrupt. He was just generalizing as it’s possible if depressed air travel continues. The CEO is also new and was put in place to set market expectations for Boeing in case sales/production is reduced.
$JETS ETF is interesting to look at. It’s been the at the lowest point recently so could play long game as I can’t see anything replacing air travel in the next few years.
Well damn, this game got fun quick after today's market session.
Seems you're breakeven on long DAL short LUV.
I'll go long DAL short UAL.
Why would you go short on Southwest? They have one of the largest domestic networks out of all the large US airlines and restrictions are likely going to be longer on long-haul routes than shorter ones. Additionally, there is likely going to be a shift towards more domestic tourism or "staycations" and people will have reduced means to pay for things like flights - this makes budget airlines more attractive. If there is one airline I would be long on its Southwest
My thinking is that budget airlines are going to be hit hardest since their clientele will have the sharpest decline in travel. I can't remember where I saw this but some Federal reserve stated that 40% of individuals making less than $40,000 a year are unemployed or underemployed because of covid-19.
I don't disagree with that, but my thinking is that the majority of Flag carrier profits come from business passengers (flying business or first class). Companies and people with tighter budgets means that the major airlines with likely 1) fly with fewer passengers (partially empty business sections) or 2) trickle down to budget airlines.
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