Airlines ETF Monthly Report: Key Takeaways
According to new research from the World Travel & Tourism Council, low bookings on incoming flights to the U.K. is a concern for the country’s economy. The number of inbound flight bookings is still around 45% down compared to pre-pandemic levels. However, outbound flight bookings from the U.K. have mostly reached pre-pandemic levels and, in some cases, even exceeded previous figures.[1]
Ryanair expects average air fares during this year’s summer peak season to be 5-10% higher than pre-pandemic prices in the same period of 2019, Group Chief Executive Michael O’Leary said this month. “What we’re seeing at the moment is prices are slightly lower than they were in 2019, pre-COVID, through March, April and May. They’re somewhere between around 10% higher at the moment through June, July, August and September,” O’Leary told the Irish Independent. [2]
United Airlines and American Airlines continue to carry each stock higher toward the end of earnings week, taking place at the end of April, reports Seeking Alpha. “We continue to see UAL as very well positioned to benefit from the industry ‘sweet spot’.” Morgan Stanley analyst Ravi Shanker wrote in a note raising his estimates. “Management believes that UAL is best positioned amongst peers due to the easier comp on International and Corporate, which is undoubtedly true against the (low-cost-carriers) and (ultra-low-cost carrier) airlines at least.” [3]
Macro Outlook
A stunning rise in the cost of jet fuel has sent airfares soaring, reports the New York Times, and industry experts say they are likely to go higher. For now, though, travel-starved consumers seem more than willing to pay up after being denied the opportunity for two years. [4]
The airline industry has been cutting flights to prepare for a busy summer travel season. JetBlue Airways, for example, confirmed this month that it plans to cut its summer schedule in a bid to avert flight disruptions as it works to ramp up hiring, reports Reuters. A spokesperson for the airline said it “already reduced May capacity 8-10% and you can expect to see similar size capacity pull for the remainder of the summer.” As the COVID-19 pandemic recedes, U.S. airlines in particular are working aggressively to ramp up hiring in preparation for a travel surge, the article explains. [5]
According to Reuters, global airline capacity has surged to its highest level in 2022 during the final week of April because of a rebound in Chinese domestic demand, despite extended lockdowns in Asia’s biggest aviation market. Even as Shanghai’s COVID lockdown drags into its fourth week, OAG data shows that global airlines still added 2.5 million seats in the week (nearly half of which are in China). [6]
Airlines ETF Performance Table (As of 30.04.2022)
|
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
|
U.S. Global Jets UCITS ETF (Acc)
|
-1.28%
|
-1.38%
|
-2.81%
|
1.88%
|
NA
|
-16.37%
|
|
U.S. Global Jets Index
|
-1.21%
|
1.49%
|
-2.43%
|
2.21%
|
-16.73%
|
-15.82%
|
Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/04/2022. Performance before inception is based on back tested data. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product.
Learn more about the U.S. Global Jets UCITS ETF