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AIRLINE INDUSTRY READY TO TAKE OFF

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· Airline industry has been underperforming since the pandemic hit, but that trend might be about to change.

· US global jet industry is off to a flying start this summer.

· The outlook might be brightening, but there are some headwinds blowing.

The US global jet industry had not that of a different return compared to the S&P 500 index from late 2015 until 2019. However, total performance was down by 16.57%, while the US blue chip stock index was up 106.97% over the last seven years.

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Nevertheless, that underperformance might be about to change as, more recently, consumer demand has been picking up. The pandemic is behind us, and borders are opened as usual. Despite recession fears and inflation scares, people are flying to explore, re-connect and do business face to face. Airline spending is picking up, as Bank of America noted, “Year-over-year airline spending growth for the week has turned positive again. We see signs of a solid start to summer travel.”

Big ticker airline spending is about to cross the positive territory, which likely responds to future travel booking, have accelerated recently, implying a positive momentum for the industry.

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The trade association Airlines for America forecasted that an all-time high of 257 million passengers would board US airlines from June 1 to Aug. 31. Demand is picking up again, as of late major US-based airlines flights are showing overbooking or negative seats.

Despite cost-of-living pressures, consumer spending has remained solid, and the demand for air travel remains robust. On top of that, air passenger demand has already exceeded its pre-COVID (2019) level this year. Air travel volumes have surged to the highest level in four years and past their Pre-Pandemic Levels, as the purple dotted line indicates 2023 data.

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Global Airlines’ financial performance in 2023 beats expectations as several key developments contribute to more robust profitability.

China lifted COVID-19 restrictions earlier in the year than anticipated. The second-largest economy in the world finally relaxing its zero covid policy after three long years should substantially boost air travel and be interpreted as bullish for the US global jets ETF (JETS).

Secondly, cargo revenues remain above pre-pandemic levels even though volumes have not.

Thirdly, on the cost side, there is some relief. Jet fuel prices, although still high, have moderated over the first half of the year.

On the flip side, there is always the risk that, despite central banks’ efforts to calibrate the best levels for interest rates to cool off inflation while avoiding tipping the economy into recession. However, the industry outlook might shift negatively if they fail and tip their economies into a recession leading to job losses.

Additionally, it’s worth pointing out that the short interest, which measures the percentage of outstanding shares of a given company or industry held by short sellers, has picked up from 1.3% in February 2021 to 10.7% as of June 2023.

JETS is a pure-play ETF that focuses on the global commercial aviation industry. Among its top holdings are Delta Air Lines Inc., Southwest Airlines Co., American Airlines Group Inc., and United Airlines Holdings Inc.

Traders can long JETS using our 3x Airlines

Alternative traders can short JETS using our -3x Airlines

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

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