BOOX Research writes in a recent article for Seeking Alpha about the impact of the Delta variant on the airline industry, trends within U.S. air travel, and a possible forecast for the JETS ETF.
The airline industry got hit hard last year with the collapse of air travel from international travel restrictions due to the pandemic. As COVID vaccinations began to roll in, the industry began to recover with surging demand. Unfortunately, even as industry data has been trending positive in the last few months, there are new concerns regarding the latest spike in COVID cases with the Delta variant over volatility and future momentum.
“While the JETS ETF remains highly volatile, the attraction here is a group of companies with significant upside potential…” writes BOOX Research.
The JETS ETF has top holdings in major U.S. carriers like Delta Air Lines Inc. (DAL), United Airlines Holdings Inc. (UAL), Southwest Airlines Company (LUV), and American Airlines Group Inc. (AAL) each with approximately 10% weighting. Instead of attempting to pick out individual winners and losers, the JETS ETF allows investors to own a bit of all the big and small major actors. In addition, JETS invests in transportation infrastructure, online travel agent sites, and international stocks to add diversification.
“We found, on August 9, 2021, TSA checkpoint travel numbers are nearly 3x up from the same period in 2020, highlighting the recovery, but just 79% from pre-pandemic trends in 2019,” reports BOOX Research.
The use of the Transportation Security Administration (TSA) traveler checkpoint data to track the number of passengers screened at U.S. airports daily aids in future projections of demand. According to data gathered in the past three months, demand has plateaued. The result is airline stocks, including the JETS ETF, have been under pressure over the past several weeks.
That said, domestically, if cases diminish moving forward with mask mandate reinstatement and other precautions, JETS ETF is positioned to capture increased demand for air travel. Internationally, a growing middle class, especially in emerging markets, supports a long runway for the airline industry.
“Overall, the JETS ETF is a high-quality fund that offers targeted exposure to an important industry,” remarks BOOX Research.
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U.S. Global Investors has authored and is responsible for the summary on this page. All opinions expressed and data provided are subject to change without notice. Opinions are not guaranteed and should not be considered investment advice.
The outbreak of the COVID-19 pandemic and the resulting actions to control or slow the spread has had a significant detrimental effect on the global and domestic economies, financial markets, and industries, including airlines. U.S. Global Investors continues to monitor the impact of COVID-19, but it is too early to determine the full impact this virus may have on commercial aviation. Should this emerging macro-economic risk continue for an extended period, there could be an adverse material financial impact to the U.S. Global Jets ETF.