Airlines Monthly Report | October

Airlines ETF Monthly Report: Key Takeaways

Over the Labor Day holiday long weekend, the U.S. Transportation Security Administration (TSA) screened nearly 11.1 million people, or 3% more over the corresponding five-day period in 2019, according to Skift.com. In fact, the TSA screened more people on four of the five days from September 1-5, marking the first sustained period of checkpoint throughput above pre-pandemic levels, the article continues. [1]

The global business travel industry continues its progress towards full recovery to 2019 pre-pandemic spending levels of USD $1.4 trillion, but recovery has hit some headwinds, writes the Global Business Travel Association (GBTA). Just as many Covid-related recovery conditions have improved, many macroeconomic conditions deteriorated rapidly in early 2022. These new developments are impacting the timing, trajectory and pace of business travel’s recovery, both globally and by region, pushing the forecast for full recovery into 2026 instead of 2024 as previously forecasted. [2]

JetBlue Airways, one of the larger holdings in the JETS ETF, upgraded its operational and financial outlook for the third quarter, reports Nasdaq.com, including revenue per available seat mile, amid ongoing strong demand. The company now expects revenue per available seat mile or RASM for the third quarter to increase between 22% to 24% year over three from 2019, compared to prior guidance for a 19% to 23% increase. [3]

Macro Outlook

A scramble for U.S. carriers to fill empty cockpits is fuelling cost pressures just as mounting economic worries have cast a shadow on travel demand, reports Reuters, sparking concerns about debt-laden airlines’ ability to repair their balance sheets. Even as ticket sales remain strong, investors worry about consumer spending should the economy slip into recession, the article continues. [4]

FlightGlobal analysis of leading groups (43 of the 50 biggest airline groups) shows they posted a collective operating loss of just over $11 billion in 2021. That, however, is a marked improvement on the $100 billion the same groups lost in 2020, the article explains. The ability to adjust, through a combination of cutting costs and developing fresh revenues, meant airlines were able to mitigate losses last year. [5]

Airline bookings improved again in the third week of September and heading into month-end, as higher pricing continues to be a major factor in the industry, reports Seeking Alpha. Bank of America reported that system net sales were just -2.9% below the level of 2019 for the week ending September 18 versus. -6.0% for the prior week. In terms of website traffic, strength was noted for United Airlines, while Hawaiian Airlines and Alaska Airlines have seemed to show some early indications that consumers may be pulling back on high-end vacation plans, the article continues. [6]

Please remember that past performance is not indicative of future performance, and when you invest in ETFs, your capital is at risk.

Airlines ETF Performance Table (As of 30.09.2022)

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/09/2022. 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.

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