Buying airline stocks takes a leap of faith
Airline stocks are a bet on a summer travel boom. One is certainly possible after a year or more of people being mostly stuck at home, but so far investors have little to go on but hope.
Shares of United Airlines fell around 6% Thursday morning, dragging down peers. The Chicago-based airline on Wednesday reported a $1.9 billion net loss for the fourth quarter and estimated that its first-quarter revenue will be 65% to 70% lower than in the same period of 2019.
Terrible numbers are unsurprising. Even in normal times, airlines struggle to make a profit during the winter months. And after a brief winter-holiday bump, traffic remains depressed amid the continuing Covid-19 pandemic. Corporate travel is expected to take years to recover, which is of particular concern to United’s business-focused network.
