Since that damn, dirty Coronavirus messed everything up, few industries suffered more turbulence than airlines — I’m not proud of that pun.
But now that *almost everyone is vaccinated and things are quasi-normal again, surely airlines are in for a big boom in 2022?
That’s where you’re wrong kiddo’!
I’m not saying that airline stocks aren’t going to recover at all in 2022 — I’m not the Oracle of Delphi — but what I can say with certainty is that things probably aren’t going to go the way you think.
Already this morning I’ve spotted no less than three punchy headlines in the vein of “the travel industry is roaring” back or some other such aggressive synonym. What nobody is asking though is whether airline stocks are actually ready?
- Few airlines are actually back to profitability yet, with the pandemic taking a massive toll on cash reserves.
- Oil prices will only get more volatile as the world’s reserves dwindle in the coming years.
- Many airlines are taking a hardline stance on not allowing unvaccinated pilots to fly, whilst coronavirus infections also sideline working pilots for up to two weeks. The staff shortages are piling up.
- Increased demand may only serve to catch the industry off guard as airlines struggle to re-hire pilots and train new ones.
- And then there’s the impending issue of 5G wireless services, which the industry fears could negatively affect automated systems that pilots use when landing in poor weather.
Adapting to these issues and the numerous other changes the coming years will bring requires cash, something which will be in far less abundance by the time this pandemic is well and truly over.
So, the next time you see a headline about the airline industry “roaring back”, take a closer look, and understand that the road to recovery is a long one.
Editor at MyWallSt
Jamie is the Content Editor here at MyWallSt. His favorite stock is Apple, which is also the first stock he ever bought. Jamie is not only a big fan of its products, but he believes that the tech giant has a whole lot more to give the world, and hasn't even scraped the surface of its potential.