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Airlines Monthly Report | September

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  • American Airlines joined other U.S. carriers in warning that the delta variant of COVID-19 is slowing sales and leading travellers to cancel flight reservations, pushing August revenue below the company’s expectations. 
  • Airlines escalated measures to get workers vaccinated. United Airlines will require vaccines for all U.S. employees, while Delta Air Lines announced it plans to assess a $200 monthly surcharge to unvaccinated workers who are part of the company’s health care plan.
  • On August 31, the EU removed the U.S. from its “safe list,” meaning it recommends that member states issue travel restrictions for visitors who have not been vaccinated. The move should not affect U.S. travellers who have been fully inoculated .

 

Performance Review

The jets airline ETF was launched on the London Stock Exchange on June 17, 2021. Through the end of August, the ETF on the LSE has shown performance of 0.49%, according to Bloomberg data . Due to the short time of availability so far, we are optimistic that the ETF can continue to show improved performance moving forward and across longer time periods. 

On June 28, the JETS UCITS ETF launched on the Xetra-Borse Frankfurt. On June 30, the JETS UCITS ETF launched on the Borsa Italiana. 

Contributing to performance of the JETS UCITS ETF since launching on the LSE continues to be increased passenger traffic (compared to 2019), borders reopening and vaccine distribution, globally. One major headwind hindering performance now is the spread of the delta variant of the coronavirus, leading to flight cancellations. Please note that all performance figures are showing net data. 

 

U.S. Global Jets UCITS ETF Performance Table (As of 31/08/2021)

 

1M

3M

6M

YTD

12M

SI

U.S. Global Jets UCITS ETF (LSE)

0.41%

N/A

N/A

-10.92%

N/A

-10.92%

U.S. Global Jets Index (JETSX)

0.49%

-13.93%

-11.89%

-10.86%

29.73%

-10.86%

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. 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. Source: Bloomberg / HANetf. Data as of 31/08/2021

 

Industry News

  • Management at Southwest Airlines made comments recently stating that the Company has a competitive advantage in the current labour environment as it did not furlough employees during the pandemic. This should allow Southwest to bring employees back more easily. The airline has already recalled employees that were on voluntary leave programs and will continue to recall all employees by the end of the third quarter.
  • American Airlines joined other U.S. carriers in warning that the delta variant of COVID-19 is slowing sales and leading travellers to cancel flight reservations, pushing August revenue below the company’s expectations. The carrier is also preparing for a more “muted” uptick in business travel into the fourth quarter but isn’t yet ready to change its financial guidance.
  • Allegiant Air reported July 2021 traffic up 7.3% versus 2019 and up 107%  year-over-year. Management reported capacity up 16.4% versus 2019, passengers up 6.4% versus 2019, and a load factor of 81.3% (versus 88.2% in 2019).
  • Spirit Airlines published an investor update, flagging a worsening September quarter revenue environment than previously expected in addition to worse-than-expected costs. Management called out the impact of rising COVID-19 cases in addition to the operational challenges the company has been facing as of late, as the driver of its reduced revenue outlook.

 

Outlook

  • The Transportation Security Administration (TSA) extended its travel mask mandate through January 18 to minimize the spread of COVID-19 on public transportation. The TSA announced it will be extending the face mask requirement for individuals across all transportation networks throughout the U.S., including airports, onboard commercial aircraft and commuter bus and rail systems.
  • According to Bank of America, U.S. airlines' website visits fell below 2019 levels to -1% for the week ending August 18 versus 2019, compared to +2% the previous week. More airlines are reporting near-term demand headwinds due to the delta variant and the end of the peak summer travel season.
  • A plan by Delta Air Lines to penalize unvaccinated workers underscores the dilemma faced by employers that want inoculated workers without triggering the practical problems associated with absolute vaccinate-or-terminate mandates, writes Bloomberg , such as firing employees who are both noncompliant and difficult to replace. The Atlanta-based airline announced it plans to assess a $200 monthly surcharge to unvaccinated workers who are part of the company’s health care plan. Imposing that type of penalty can have implications under laws governing wellness programs and anti-bias protections, legal observers said.
  • Goldman Sach’s pricing study shows that airline fare trends for the holidays have worsened recently. Fares for the Friday departure of Labour Day weekend have turned negative for the first time on a year-over-year basis, and year-versus-2019 performance worsened 10 points from the prior three weeks.

 

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