The airline industry understandably took a big hit in 2020, following the emergence of the Covid-19 pandemic. Since then, share price performances within the sector have encountered turbulence.
So, how have airline shares performed in recent times? And will the airline sector fly higher during the rest of 2022? Let’s take a look.
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How did airline shares suffer due to the pandemic?
The US Global Jets ETF (exchange-traded fund) shows just how much the global airline industry suffered as a result of the Covid-19 pandemic. On 21 February 2020, the ETF was valued at $30.44 (£23.29). By 12 March it had plummeted to $12.49 (£9.54). That’s a fall of almost 60% in the space of three weeks.
Looking at European airline share prices in early 2020 paints a similar picture. Shares in International Consolidated Airlines Group – the owner of British Airways – slumped 66% over the same period. Meanwhile, current FTSE 250 members easyJet and Wizz Air holdings saw their respective share prices tumble 68.5% and 48%.
Ryanair didn’t escape the early 2020 bloodbath either. The Irish carrier, which has since delisted itself from the London Stock Exchange, saw its share price plummet 45% between February and May 2020.
Looking back, it’s easy to see why investors were so concerned about airline stocks at the time. The pandemic temporarily put an end to travel as we knew it, thanks to rules restricting international journeys. For travel that was permitted during the pandemic, passengers faced a host of new inconveniences, from testing requirements to passenger locator forms.
How have airline shares performed recently?
Since those dark days of 2020, some airline shares have partly bounced back. The US Global Jets ETF now stands at over $20 – almost double its pandemic low. Meanwhile, Ryanair’s share price stands at $84, comfortably above its $49.75 value in March 2020.
EasyJet and Wizz Air haven’t been as fortunate, however. The easyJet share price stands at 539.17 GBX, less than half of its 1,270 GBX pre-pandemic level in February 2020. It also isn’t much higher than its 505 GBX value in March 2020.
Wizz Air’s current share price of 2,646 GBX is also only a tad higher than its March 2020 low of 2,278 GBX.
In terms of the performances of airlines since the year began, all of the above names have suffered this year. Wizz Air is the biggest loser so far, with its share price sitting 43.5% lower than it did at the beginning of 2022. Analysts suggest Wizz Air’s poor 2022 has been partly down to the war in Ukraine. This is because the carrier has significant operations in Eastern Europe.
Meanwhile, Dublin-listed Ryanair has seen its share price plummet 20.8% since January. EasyJet’s share price is down 11.13% over the same period, while IAG’s share price is 11.39% lower.
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Will airline shares fly higher for the rest of 2022?
With airline shares struggling in recent times, bargain-hunting investors may be tempted to buy airline shares at perceived ‘knock down’ prices. Such a strategy assumes airline shares won’t go any lower.
Of course, if airline shares do go lower, then recent bargain-hunting investors face a loss. However, should the industry fly forward in the near future, the same investors could be patting themselves on the back.
Unfortunately, without a crystal ball, it’s impossible to predict the exact trajectory of airline shares for the rest of the year. That said, should international travel continue moving closer to the pre-pandemic world we all knew, it is possible the sector could soon enjoy a resurgence.
However, on the other side of the coin, if international restrictions get tighter – perhaps a result of negative Covid-19 developments – then it’s also possible that travel will become less appealing in future. If this happens, airline stocks are likely to have further to fall.
To learn more about the drawbacks of buying stocks after they fall, take a look at our article that explores the pitfalls of ‘buying the dip’.
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