The stock markets might be doing fairly well, but many travel stocks are still struggling. No points for guessing why, of course. We all know the impact of Covid-19 on these stocks, and the uncertainty drags on for them. This is evident in the latest updates from two FTSE 250 airline stocks released earlier today. The stocks in question are Wizz Air (LSE: WIZZ) and easyJet (LSE: EZJ), both of which paint a mixed picture. Here, I explore each case individually and try and figure out if this is a good time to buy either or both the stocks.
Wizz Air recovers fast
Wizz Air’s recovery does not look too bad to me. For the three months ending 31 December 2021, the company reported an impressive 243.4% increase in passengers carried from the same time the year before. Of course there was barely any travel happening in 2020, so there is the advantage of a low-base effect in these numbers. Still, it does show what a long way it has come. Revenues also increased considerably, by 172.5%.
However, its reported loss has actually risen by 130% during this time as well. And it does not seem likely that will turn around anytime soon. In fact, it expects the operating loss next quarter to be higher than during the last one, as the Omicron variant continues to impact travel demand.
Optimistic outlook
Wizz Air is “cautiously optimistic” that the recovery will continue from spring onwards, which is encouraging. A similar optimism is evident in easyJet’s outlook as well. In its trading statement for quarter ending 31 December 2021 as well, the airline sounds even more bullish than Wizz Air. It says, “We see a strong summer ahead, with pent up demand that will see easyJet returning to near 2019 levels of capacity”.
easyJet halves losses
Even though full details for the quarter’s financials are not available yet, the numbers so far also look good too. EasyJet has noted that the relaxation of the pre-travel testing rules on 5 January 2022 resulted in an uptick in bookings. It also says that load factors improved through much of last quarter. December saw a decline because of Omicron, however. Nevertheless, it says that its loss has halved during the year and the cash burn has reduced significantly too.
Which FTSE 250 stock would I buy?
Clearly, things are looking up for airline stocks. But there is still a whole lot of uncertainty in the air, as is evident from the recent Omicron episode. I am not sure if we are out of the Covid-19 woods yet, so there might be still more challenges in store for them. So I would continue to be cautious about buying them.
Of the two of them, however, the Wizz Air share price has run up far more than that of easyJet. I have already bought easyJet shares but even if I had not, if I had to buy one of the two of these FTSE 250 stocks, it would be my pick.
