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Airline stocks set to soar after Labor Day or lose altitude? This top analyst reveals her big call

Brian Sozzi
·Editor-at-Large
·3 mins read

Airline stocks may have too much altitude underneath them given the ongoing realities of the COVID-19 pandemic.

“No, I mean, think about it. We’re going into the fall and we are going into a point of time when corporate travel takes over from leisure travel. August is usually a very strong leisure month, and I think we saw that with about 800,000 people traveling. September we don’t think you will see that because corporations aren’t travel,” Cowen managing director and senior airlines analyst Helane Becker told Yahoo Finance’s The First Trade on whether the big run-ups in the sector of late are warranted.

To be sure, the speculators descended on the battered airline space in August.

Shares of Delta (+23% in August), Southwest (+23), American Airlines (+18%), and JetBlue (+12%) all notched solid gains in August. The NYSE Arca Airline Index — which measures the performance of airline stocks — rose about 18% in August. The S&P 500 gained 7.5% in the month. The ARCA even outperformed the red-hot Nasdaq Composite in August — it only increased 11% in value.

The plane takes off during the first holiday flight of the Corendon Airlines Europe to the Greek destination Rhodos at the airport Erfurt-Weimar in Erfurt, Germany, Thursday, July 2, 2020. The tourist air traffic was interrupted for several months due to the corona pandemic. (AP Photo/Jens Meyer)
The plane takes off during the first holiday flight of the Corendon Airlines Europe to the Greek destination Rhodos at the airport Erfurt-Weimar in Erfurt, Germany, Thursday, July 2, 2020. The tourist air traffic was interrupted for several months due to the corona pandemic. (AP Photo/Jens Meyer)

The moves come despite the prospect for more airline industry layoffs this fall, dreadful third and fourth quarters on tap and no fresh round of government stimulus. Next up could be renewed bankruptcy chatter, which could place pressure on airline stocks.

Says Becker, “I don’t think what you saw last month necessarily reflects what’s happening in real-time. I think what you saw last month was some hope that the government would step in and provide additional financing to the airlines through March of next year, which was obviously still pending.”

Indeed the raw data on travel underscores Becker’s concern on airline stocks amid the pandemic.

Checkpoint numbers for August 31 out of the Transportation Security Administration came in at 711,178, down sharply 2.3 million for the same week a year ago. The closely watched TSA data showed little improvement from the start of August until the close of the month.

Labor Day weekend hotel bookings are down a disturbing 66% from last year, according to new data Monday from the industry trade association the American Hotel & Lodging Association (AHLA).

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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