Omicron isn’t hurting travel stocks. Here’s why
That’s been great news for the beleaguered travel sector.
Investors appear to be banking on a strong rebound next year and beyond, even though a lot of uncertainty remains about travel plans for the next few weeks.
Although Carnival CEO Arnold Donald conceded there has been “a little spike in near-term cruise cancellations” due to rising Covid cases, he added that “the booking patterns are strong” and that “we have not seen any major impact” on plans for the second half 2022 and 2023.
“The current environment, while choppy, has improved dramatically since last summer,” Donald said, adding that as “the current trend of vaccine rollouts and advancements in therapies continues, it should improve even further by next summer.”
With that in mind, Donald said Carnival has the potential to generate stronger earnings in 2023 than it did in the pre-pandemic year of 2019.
Business travel may soon return
Travel executives are also cautiously optimistic that people will start taking business trips again instead of relying on Zoom video conferences and endless chains of Slacks and emails.
“Old behaviors die hard,” said Delta CEO Ed Bastian during an investor presentation last week. “People like to be together …This is why we travel. This is why we’re social creatures.”
Health officials aren’t expecting the Omicron variant will lead to a new round of lockdowns, and as long as that holds true, airline experts believe leisure and corporate travelers will likely continue to feel safe getting on planes.
AAR’s stock rose 5% Tuesday following its earnings report and was up another 3% Wednesday.
