Travel’s Recovery Has Not Yet Smoothly Landed – and There’s the Opportunity

As we move from social distancing to social proximity – as more Americans are vaccinated – travel is making a solid comeback.

Has travel activity returned to normal? Not quite.

To be sure, many travel-related stocks are trading as if boom-time conditions have returned to the travel industry.

Southwest Airlines Co. (NYSE:LUV) stock, for example, has climbed all the way back to its pre-Covid-19 levels.

When Southwest reported earnings on Thursday, April 29, it missed revenue estimates by $20 million but beat earnings estimates by $1.84 per share – coming in at $2.05 billion and $0.19 per share, respectively.

After mixed results like that, Southwest has dipped a little. So, at around $61.50, it still has a chance to inch back to its recent high of $64.75 … and its all-time high of $66.99, which it reached in December 2017.

But that’s not that much opportunity. It’s not even a double-digit gain.

Southwest is in this sweet spot because of its domestic focus and enviable balance sheet. Other airlines have overseas exposure – where the coronavirus is still flaring up – or other issues, and so they haven’t recovered as fully as Southwest.

That’s great for Southwest as a corporation… but not so much for investors…

Many travel stocks have fully rebounded from the depths of early 2020, even though global travel activity remains depressed.

Because of this disconnect, it’s difficult to find good plays on a global travel recovery.

But I spotted one such play last week… and jumped on it.

When Bad Is Good

This travel company reported quarterly earnings that missed the mark on almost every applicable metric.

Revenues fell well short of what analysts expected. Earnings also missed the mark by a large margin.

Free cash flow slumped to levels even worse than what it reported in each of the two previous quarters.

None of that is good. Covid-19 really put a hurting on the travel industry over the past year, though, so it’s not surprising.

However, I’m confident that a comeback is in the making.

Full story on

Leave a Comment