The easyJet share price has been smashed by the stock market crash. That’s hardly surprising, as Covid-19 halted global air travel almost overnight. However, it’s up almost 30% in the last month, as investors spot a FTSE 100 buying opportunity.
If you’re tempted, you should also consider the Wizz Air share price. It’s held up relatively well, supported by a strong balance sheet. As the world eases out of lockdown, long-term investors might want to take advantage of their cut-price valuations.
Wizz climbs after stock market crash
This morning, Wizz Air Holdings (LSE: WIZZ) climbed about 2% as full-year results showed record profits, up a third to €344m (the easyJet share price is a faster riser, up 6%). Unfortunately, these figures only run to 31 March, so don’t reflect the coronavirus mayhem.
The east-Europe focused budget airline pulled guidance due to the pandemic, but said strong liquidity should sustain it throughout the crisis and allow it to “take advantage of market opportunities as they arise.” At the end of March, Wizz held €1.5bn in cash.
The future now depends on whether we can start flying during the key summer period. Wizz is still in expansion mode and will honour new aircraft deliveries, as it aims to increase passenger numbers once the lockdown’s lifted. This is in contrast to many carriers, who plan to cut their fleets.
The Wizz share price is up 22% in the last month, as investors spot an opportunity. This could be an exciting one, as it plans to expand across the Middle East, Africa and the Indian subcontinent, using Abu Dhabi as a hub. It may have more scope for growth than the easyJet share price.
One threat is that the crisis could hit all-important ancillary sales, as food and drink may be banned on flights as a safety measure. These currently make up 45% of revenues. Despite this headwind, Wizz looks tempting as it trades 23% lower than before the crisis.
The easyJet share price flies
Competition will be tough as the airline industry battles to make up lost revenues. Budget carrier easyJet (LSE: EZJ) plans to resume flying from 15 June. It optimistically expects half of its network could be in operation in July and three quarters by the end of August.
However, capacity will be just 30% of the normal summer season, so we’re a long way from normality. Again, ancillary earnings will be hit as there’ll probably be no food or drink served. Costs will rise with a daily disinfection process and the easyJet share price recovery may be bumpy.
Social distancing may also make flying effortful and put some off, but I reckon customer demand will be strong as people yearn to travel again. The airline will be a leaner operation, with 4,500 jobs gone.
EasyJet is launching its “biggest ever” summer sale, which may win business but reduce revenues. The skies remain cloudy, but the risk is reflected in the easyJet share price. It currently trades at roughly half January’s pre-pandemic levels.
The easyJet share price isn’t the only one bargain following the stock market crash.
