We may still have a long way to go before the novel coronavirus pandemic is no longer an issue. But, the recovery has already started for hard-hit names like
And that's no surprise. Since mid-May, the airlines have started clawing their way back towards pre-pandemic air traffic levels. Granted, a look at
However, things are moving in the right direction. And, given public sentiment remains largely pessimistic, coronavirus tailwinds remain more than priced into airline stocks.
Yet, if the pandemic cools down sooner than expected, names in the sector stand to make substantial additional gains. And, it's low-cost airlines like LUV stock that stand to gain the most.
How so? With a stronger balance sheet than its legacy rivals,
In short,
LUV Stock Vs. Legacy Carriers
Granted, a sooner-than-expected comeback for air travel bodes well for airline stocks across-the-board. But, there are many reasons why low-cost carriers like
Firstly,
Yet, in terms of liquidity, the carrier can outlast many of its rivals. As announced back in June,
Secondly, this airline is second to only another favorite of mine,
Compare that to all three legacy carriers.
Sure, at first glance the gap between 65% and 75% doesn't look that large. But, when you consider the high fixed costs of the aviation industry, ten percentage points make a big difference. In other words, while the three 'old school' carriers could continue hemorrhaging cash well into next year,
And this could benefit LUV stock not just in the short-term, but long-term as well.
(C) 2020 Electronic News Publishing, source