Air travel may be ramping up in a huge way as travelers start to scratch that rabid itch that’s been forming as a result of the Covid-19 pandemic. However, airline stocks are dropping off today. With airline stocks down even as travel ramps up, investors want to know what’s going on. Well, it seems like the impending pilot shortage might be complicating things a bit.
The Motley Fool published a deep dive into the looming shortage on Sunday. Citing the requirement that commercial airline pilots retire at the age of 65, and the fact that many pilots are hitting this age in 2021, there is evidence of a shortage coming. The shortage is also being made worse by the fact that the hiring of new airline pilots is not fast enough to keep up with the intensely growing demand.
The result, according to the Fool, will be a blow to regional airlines in particular. Companies like Southwest Airlines (NYSE:LUV) and Delta Air Lines (NYSE:DAL) are more insulated from these blows than a company like United Airlines (NASDAQ:UAL). UAL and its robust network of regional partners will likely struggle to pick up new hires.
Airline Stocks Down: How Long Will This Bearishness Last?
So far today, we are seeing commercial airline plays trend down at around the same levels. American Airlines (NASDAQ:AAL) is down 4.5%, while UAL and DAL are both down 4%. LUV seems to be the least affected by investor bearishness, only dropping 3% today. But with airline stocks down today, what can we expect for the future? Will this continue as the shortage becomes more apparent?
It is hard to say — until the industry is confronted face to face with a shortage. Until then, this is all speculative bearishness. But, prospects are still high on airline stocks even with a shortage in mind. Obviously, demand is not going to wane anytime soon. As long as there are pilots to occupy cockpits, the industry isn’t going to grind to a halt just because of increased retirement. As stated in the Fool, airlines like DAL and LUV won’t be hit quite as hard.
And while UAL might be one of the plays with a shorter end of the stick, it is still making news that is reinvigorating investors. The company is forking up $30 billion to expand its fleet of aircrafts further. All in all, the company will be purchasing 270 jets; the news is coming just ahead of United’s investor event which could bring even more good news.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
