After the start of the pandemic, the entire world economy showed serious drawdowns, but the crisis affected the airlines most of all. Moreover, while other sectors suffered from a slowdown in growth and a massive reduction in production, air carriers faced a direct reduction in demand due to covid restrictions. However, the dynamics have changed somewhat in recent months. Read about what happened and what to expect from the industry in the future in this material.
What's going on with the industry?
In order to make any prediction, it is worth understanding what the situation is at the moment. In the airline industry, we can now see a slight recovery from the twentieth year. The world is used to living with the coronavirus, and people are starting to travel more and more. Of course, the ancestral level is still quite far away, but positive dynamics are already noticeable.
However, if we look at other objective economic indicators of the sphere, in addition to the number of sales, we will notice that the total amount of airline debt continues to grow, and experienced investors are in no hurry to invest in the industry again.
What will happen next?
Against this background, a natural question arises, what will happen to the industry in the future. On the one hand, there are all prospects for growth, because demand is increasing, and many competitors have closed, that is, the field of activity is free. On the other hand, this market still looks unstable, given that the global average rate of vaccination is rather low, and the delta strain may cause new restrictions.
In addition, experts remind that even before the pandemic, airlines were not very profitable in terms of securities. For example, one of the indices, which focused only on the airline industry, grew significantly slower than the Dow Jones.
Also, do not forget about the massive "weight" that hangs on the "leg" of any airline in the form of debts. The fact is that the main players in this industry recklessly expected a quick recovery in demand and did not take into account the mistakes of the past crisis. Nowadays, not all companies have reduced the number of unnecessary expenses and are living “on credit”, hoping for the rapid growth of the industry.
Nevertheless, taking into account the effect of the “low base”, when a lower base value gives a larger percentage increase in the share price, with the right approach, you can get both one hundred and two hundred percent growth.
The air transportation industry is rather unstable, and the same dynamics was observed in the dock times. However, given the market position, as well as external conditions and low base, airlines may show significant growth in the near future.