Get Ready For Take-Off

In July 2021, global markets posted gains, spurred by companies’ Q2 earnings announcements and positive market sentiment. Not only did “traditional investments” recorded strong price gains, but cryptocurrencies also had their 5 minutes of fame.

Positive sentiment entered another dimension when Richard Branson reached space on a Virgin Galactic flight, setting a new milestone for the future of the aviation industry. For us mere mortals, the first commercial flights are planned for 2022 and high bids are submitted for tickets.

Those who cannot afford a starting price of $450,000 per seat will have to satisfy their need for new destinations and experiences by using good old airline companies.

Although the world pandemic has brought tremendous losses to the industry and nailed airplanes to the ground, we already start seeing a recovery in the sector. The airlines have been broadening access to vacation destinations and are slowly recovering from the lockdowns around the world.

Seasonal patterns in the airline industry are also spurring rallies in the stocks of several airline companies starting in late August.

One of them is Southwest Airlines Corp. (LUV), one of the leading airlines in the US. The company focuses primarily on short-haul and point-to-point flights. During the pandemic, the company has suffered losses. But the question remains whether the stock will regain its strength during the historically strong seasonal period.

Southwest runs a largely domestic network focused on leisure travelers and maintains one of the strongest balance sheets in the industry. These attributes are proving especially valuable: leisure travel has rebounded faster than business travel and long-haul international flights. By looking at the past performance of Southwest Airlines shares we can draw some conclusions and prepare accordingly.

Seasonal pattern of Southwest Airlines over the past 10 years

(Click on image to enlarge)

Interactive Chart: Seasonax

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Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular ...

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