Current international border, the restrictions and the reduction of business travel in the rest of the year 2020 probable that new cases of coronavirus continues to emerge. The low-cost carriers, appear better suited to operate in this turbulent environment, given their reduced exposure to foreign countries and focused on leisure markets.
Travel insurance comparison site Squaremouth says that the policies purchased show that domestic trips account for 57% of the planned trip in the rest of the year 2020, compared to only 12.3% compared to the same period last year. During this time, US Travel Association ceo Roger Dow believes that holiday travelers will lead the recovery. “Our research has actually said that leisure travel will be among the first to come back,” he said, per The Washington Post.
In recent months, the budget airlines have added additional discounted flights to the most popular destinations to attract customers back into the sky, after months of being locked in the house under imposed lockdown measures. Below, we take a look at three of these carriers and look to the charts point to possible trading opportunities.
Spirit Airlines, Inc. (SAVE)
Florida-based Spirit Airlines, Inc. (SAVE) provides low-cost air services to around 75 destinations in the united States, the Caribbean and Latin America. Thanks to a better-than-expected demand throughout the pandemic, the no-frills carrier has increased its daily flights from 50 in April to more than 300 by the end of last month. In addition, the airline plans to add more flights in the months of July to meet the increased summer demand for travel such as the sars coronavirus restrictions at ease. However, chief executive officer Ted Christie said that, if the number of passengers in the autumn, in the midst of an increase in the number of new infections by the virus, the budget airline will quickly cut flights. As of July 13, 2020, Spirit Airlines has a market capitalization of $1.55 billion and is trading at nearly 25% over the last three months.
Since the beginning of June, the share price is trading in a triangle down which is a confluence of support from a horizontal trendline and the 50-day simple moving average (SMA). The stock has rallied over 10% from this level on Friday, in a move that may induce further buying in the coming weeks. Those who buy here should consider placing a stop-loss order below the July low of $15.54 and booking profits on a test of the 200-day SMA.
JetBlue Airways Corporation (JBLU)
Low-cost carrier JetBlue Airways Corporation (JBLU) flies to nearly 100 destinations in the united States, Latin America and the Caribbean. The $ 2.86 billion in New-York, the airline announced in June that it had added 30 new domestic routes to serve customers looking for leisure travel to visit friends and relatives after the pandemic of lock. It has also resumed flights to nine temporarily closed cities and summer destinations, such as Martha’s Vineyard and Puerto Rico. JetBlue stock was down 44% year to date, but has rebounded 11.58% since mid-April as of July 13, 2020.
JetBlue shares are facing serious support of a major horizontal line around$ 10. The bulls have successfully defended this level in Friday’s session to close the stock comfortably above 50-day SMA. Conservative traders may wait for the moving average convergence divergence (MACD) indicator crosses over its trigger line and generate a buy signal before entering. Those who take a position the target is moved to the June 8 high at $15.62, but limit losses if the price fails to hold above this month’s low at $9.86.
Southwest Airlines Co. (LUV)
Famous for his blue, yellow and red livery, Southwest Airlines Co. (LUV) operates a low-cost passenger airline that provides flights to the united States and near international markets. The company, which operates more than 700 airplanes in a Boeing fleet, announced last month that it plans to introduce additional flights and routes to meet the increased leisure travel during the fall and winter holidays. The Dallas-based airline also provides for the operation of more non-stop flights to the most popular destinations, including Phoenix, Denver, Las Vegas, and Nashville from the beginning of November. Southwest Airlines stock has exceeded that of the airlines industry average of 9% year to date but is still down 38% year-on-year as of July 13, 2020.
The price of the stock has caught a bid on Friday in a support zone between $30 and $32.50, indicating active accumulation in this area. In addition, the relative strength index (RSI) is well below the levels of overbought, which gives the stock plenty of room to test the rising prices before the consolidation. Those who take a trade should set a take-profit order around $42.50 – a place of possible resistance from the months of March and June swing highs. The protection of capital with a stop somewhere under$30.