Airline investors should brace for a turbulent ride

WITH vaccines for the novel coronavirus making their way across the globe, rekindling hopes for borders reopening and international travel resuming, one may argue now is an opportune time to invest in beaten-down airlines.

Of the 27 stock components of Bloomberg World Airlines Index, the majority have seen their stock prices plunge between 2 per cent and 61 per cent year to date. But recent news of the availability of vaccines and travel bubbles have lifted airline stock prices from their trough. These will continue to push up stock prices when airlines report resumption of more flights, and countries relax immigration restrictions.

Before one gets enticed by the upside potential and rush to put money into an airline counter, one should know that the civil aviation sector is not out of the woods and is still fraught with challenges in the short term.