Airline stocks are once again flying higher today, with American Airlines (NASDAQ:AAL), Delta Air Lines (NYSE:DAL) and United Airlines (NASDAQ:UAL) all gaining. Following up on some sector-wide bullishness earlier this week, it seems there are two new catalysts for the move. So what do you need to know now as AAL, DAL and UAL stock soar?
- Airline stocks have been some of the hardest-hit equities during the pandemic.
- However, Deutsche Bank led a wave of renewed optimism in the sector on Monday with a major upgrade.
Following a sector-wide upgrade from Deutsche Bank analyst Michael Linenberg, many investors are feeling new confidence in airline stocks. Why? Just as Linenberg outlines, consumers will start to fly once it is safe to do so. The reopening rally continues to power ahead on Wall Street, with airlines, cruise operators and other travel plays gaining early this week.
Today, the CEOs of major passenger airlines are putting their weight behind another catalyst that will help the reopening story. More than 150 senior executives wrote a letter supporting the $1.9 trillion stimulus proposal from President Joe Biden. This list includes execs from American and United Airlines, as well as Goldman Sachs (NYSE:GS), Intel (NASDAQ:INTC) and International Business Machines (NYSE:IBM). The House of Representatives will vote on the proposal this week, and with Democrat control in Congress, it looks set to pass.
Right now, it seems that this executive support should strengthen the case for Democrats. And beyond that, it outlines a trajectory for airlines, and other businesses, to return to normal.
Reason No. 2: Vaccines Boost Airline Stocks
The second big reason for the rally today in airline stocks is closely related. In addition to stimulus measures, investors are watching gradually improving Covid-19 statistics. Those statistics are also getting a big boost from healthcare advancements. Today we learned that Relief Therapeutics (OTCMKTS:RLFTF) is set to seek emergency-use authorization for its respiratory treatment. We also learned that Johnson & Johnson (NYSE:JNJ) could have its vaccine approved as early as Saturday. With more treatments and a huge push to the vaccine rollout, we could all be flying to visit friends, family and foreign destinations soon.
Another prong to this story is easing international lockdowns. United Kingdom Prime Minster Boris Johnson just outlined a path for the country to exit its third lockdown. Flight bookings jumped more than 300%, while holiday bookings jumped 600%. As we start to see more countries outline exits to lockdown measures and gathering limits, U.S. airlines could see a sustained boost.
Keep airline stocks on your radar. The road ahead may be bumpy, but analysts are now confident they will stick the landing.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.
