Airline stocks recorded their first back-to-back weekly gains since early October, potentially marking the beginning of a long-overdue recovery, amid growing signs that a reopening of the economy is gaining pace.
The S&P Supercomposite Airlines Industry Index closed up 6.1 per cent this week, after a 3 per cent gain last week, as investors continue to shun higher-risk growth stocks given expectations for aggressive interest-rate hikes.
At the same time, many states have announced plans to loosen Covid-related restrictions, and results from MGM Resorts International and Walt Disney suggest travel demand may be returning. A deal between low-cost carriers Frontier Group Holdings and Spirit Airlines also boosted sentiment.
Yet the horizon is far from clear for airlines. Just as the threat from Covid-19’s newer variants seems to be dissipating, the steady surge in the price of oil could squeeze profits. For now, investors appear more focused on carriers’ ability to fill seats.
“Demand recovering is the key part of the equation right now,” Fiona Cincotta, senior financial markets analyst at City Index, said in an email. “While high oil prices are definitely a consideration, the fact that customers are ready to fly again is offsetting those fears for now.”
Jet fuel typically comprises 20 per cent to 25 per cent of airlines’ annual operating expenses, according to Bloomberg Intelligence data. Also, most US airlines don’t hedge against oil price fluctuations. Only Alaska Air Group and Southwest Airlines have some hedges in place, according to BI analyst George Ferguson.
“The last time oil was at $100, the airlines were really quite profitable,” Cowen analyst Helane Becker said, noting that while margins will be squeezed, there are ways to manage that. “The airlines will reduce capacity and raise fares, which would cover the higher labour and oil prices.”
All but one of the nine members of the airline index closed up for the week, with the biggest gains coming from United Airlines Holdings, SkyWest, Hawaiian Holdings and American Airlines Group, which are also among the biggest decliners in the group compared to pre-pandemic levels.
The index itself is trading about 30 per cent below the levels touched in mid-February of 2020, while the S&P 500 has climbed 31 per cent over the same period.
As vaccines continue to roll out and restrictions ease, “pent-up demand for flying could mean that 2022 will be a strong year for the airlines, potentially taking share prices back to pre-pandemic levels,” Ms Cincotta said.
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ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
More from Rashmee Roshan Lall
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
Four tips to secure IoT networks
Mohammed Abukhater, vice president at FireEye in the Middle East, said:
- Keep device software up-to-date. Most come with basic operating system, so users should ensure that they always have the latest version
- Besides a strong password, use two-step authentication. There should be a second log-in step like adding a code sent to your mobile number
- Usually smart devices come with many unnecessary features. Users should lock those features that are not required or used frequently
- Always create a different guest network for visitors
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
WHAT IS A BLACK HOLE?
1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
The biog
Simon Nadim has completed 7,000 dives.
The hardest dive in the UAE is the German U-boat 110m down off the Fujairah coast.
As a child, he loved the documentaries of Jacques Cousteau
He also led a team that discovered the long-lost portion of the Ines oil tanker.
If you are interested in diving, he runs the XR Hub Dive Centre in Fujairah
Killing of Qassem Suleimani
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Other ways to buy used products in the UAE
UAE insurance firm Al Wathba National Insurance Company (AWNIC) last year launched an e-commerce website with a facility enabling users to buy car wrecks.
Bidders and potential buyers register on the online salvage car auction portal to view vehicles, review condition reports, or arrange physical surveys, and then start bidding for motors they plan to restore or harvest for parts.
Physical salvage car auctions are a common method for insurers around the world to move on heavily damaged vehicles, but AWNIC is one of the few UAE insurers to offer such services online.
For cars and less sizeable items such as bicycles and furniture, Dubizzle is arguably the best-known marketplace for pre-loved.
Founded in 2005, in recent years it has been joined by a plethora of Facebook community pages for shifting used goods, including Abu Dhabi Marketplace, Flea Market UAE and Arabian Ranches Souq Market while sites such as The Luxury Closet and Riot deal largely in second-hand fashion.
At the high-end of the pre-used spectrum, resellers such as Timepiece360.ae, WatchBox Middle East and Watches Market Dubai deal in authenticated second-hand luxury timepieces from brands such as Rolex, Hublot and Tag Heuer, with a warranty.
Global state-owned investor ranking by size
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China
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UAE
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Japan
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Norway
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Canada
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Singapore
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Australia
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Saudi Arabia
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South Korea
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Should late investors consider cryptocurrencies?
Wealth managers recommend late investors to have a balanced portfolio that typically includes traditional assets such as cash, government and corporate bonds, equities, commodities and commercial property.
They do not usually recommend investing in Bitcoin or other cryptocurrencies due to the risk and volatility associated with them.
“It has produced eye-watering returns for some, whereas others have lost substantially as this has all depended purely on timing and when the buy-in was. If someone still has about 20 to 25 years until retirement, there isn’t any need to take such risks,” Rupert Connor of Abacus Financial Consultant says.
He adds that if a person is interested in owning a business or growing a property portfolio to increase their retirement income, this can be encouraged provided they keep in mind the overall risk profile of these assets.
Killing of Qassem Suleimani
More from Neighbourhood Watch:
Panipat
Director Ashutosh Gowariker
Produced Ashutosh Gowariker, Rohit Shelatkar, Reliance Entertainment
Cast Arjun Kapoor, Sanjay Dutt, Kriti Sanon, Mohnish Behl, Padmini Kolhapure, Zeenat Aman
Rating 3 /5 stars
More from our neighbourhood series:
'Skin'
Dir: Guy Nattiv
Starring: Jamie Bell, Danielle McDonald, Bill Camp, Vera Farmiga
Rating: 3.5/5 stars
Five films to watch
Castle in the Sky (1986)
Grave of the Fireflies (1988)
Only Yesterday (1991)
Pom Poki (1994)
The Tale of Princess Kaguya (2013)
