A New Airlines ETF (AIRL) Hits the Market
Themes ETFs recently launched a pureplay airlines ETF, namely Themes Airlines ETF (AIRL). The resurgence of consumer demand post-pandemic has encouraged the issuer to launch the fund. Let’s delve a little deeper.
Inside AIRL
The Themes Airlines ETF (AIRL) looks to track the Solactive Airlines Index, which identifies the largest 30 airline companies by market capitalization. The fund AIRL seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the SOLAIRN Index.
The 31-stock fund charges 35 bps in fees. Ryanair Holdings (5.02%), Deutsche Lufthansa (4.98%) and EasyJet (4.94%) hold the top three spots in the fund. United States (37.1%) take the top spot in the country allocation, followed by United Kingdom (9.4%) and Japan (9.1%).
How Does It Fit In a Portfolio?
The International Air Transport Association (IATA) anticipates a solid surge in traveler numbers and revenues for airlines in 2024. The sector is projected to achieve a net profit of $25.7 billion, with a 2.7% net profit margin. This forecast marks a modest improvement from the revised estimate of $23.3 billion net profit and a 2.6% margin for the current year, as quoted on CNBC.
Airports Council International too expects a rebound in 2024. The agency believes that the airline travel is projected to grow over 25% by 2027 relative to pre-pandemic levels. International travel is expected to contribute to the rebound in airline traffic. European travel giant Tui has also issued an optimistic forecast for a 25% rise in EBIT in 2024 (read: Airlines ETF (JETS) to Surge in 2024 on Solid Travel Forecast?).
In 2024, the airline industry is set to witness a 7.6% annual increase in total revenues, reaching a historic high of $964 billion. The number of travelers is expected to climb to approximately 4.7 billion, surpassing the pre-pandemic figure of 4.5 billion in 2019.
Competition
The expense ratio of the newbie is 50% lower than the category average. This is also lower than what the only one pureplay airlines ETF U.S. Global Jets ETF JETS charges, i.e., 60 bps. The fund JETS currently has an AUM base of $1.79 billion.
Apart from this, there are transportation ETFs like SPDR S&P Transportation ETF XTN and iShares U.S. Transportation ETF IYT. These funds, too, hold airlines stocks. These funds charge 35 bps and 40 bps, respectively.
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iShares U.S. Transportation ETF (IYT): ETF Research Reports
U.S. Global Jets ETF (JETS): ETF Research Reports
SPDR S&P Transportation ETF (XTN): ETF Research Reports
