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Travel narrows the mind – and the investment options?

8 Sep 2021 1 month(s) ago

What are the investment prospects for the travel industry? It is not straightforward.

The biggest casualty from the ‘pandemic’ has been the travel industry. That does not mean writing off the sector, though. Investing when things are at their worst can often be the best move. Perhaps the biggest victim, Qantas, has seen a share price bounce back:

Even Flight Centre’s share price has shown some recent strength:

According to Goldman Sachs, the outlook for the end of the year is alright, although the short term looks grim. “Even if domestic mobility restrictions start to ease by the end of October, it is likely that other states remain closed to NSW residents in terms of non-essential travel. Similarly, the outlook for VIC also remains in similar uncertainty.

“We believe that the Federal Government’s 4 step reopening plan is the best guide to estimate what reopening looks like in Australia. According to this, we note that Phase C, which is expected to begin once 80% of the population above the age of 16 is vaccinated, should bring a reduction in domestic border restrictions, although this still remains at the discretion of the respective state governments. Currently, the forecasts point to Australia reaching this target by mid-November.

“Sydney and Melbourne account for more than 50% of all domestic passengers (inbound and outbound) on a pre-pandemic basis (CY19), implying a significant drag in recovery if NSW and VIC remain locked out from the rest of the country. Sydney Airport’s 1H21 results presentation indicated that traffic in July 2021 had collapsed to peak crisis levels in Apr-May 2020."

Here are the domestic passenger trends:

Goldman is bullish in the medium term “We now expect activities to remain subdued till end of November but recover quickly through the holiday season and return to pre-June recovery rates in February-March 2021. We flag that this expectation is not without downside if individual states decide to maintain restrictions even beyond the 80% vaccination rates. However, we expect incentives like entry restrictions to venues and workplaces as seen in various other countries will act as a positive reinforcer of vaccine demand, especially since the two most populous states remain in strict lockdown and is unlikely to ease restrictions till the vaccination hurdle rates have been achieved.”

Yep, can’t move forward until we blackmail enough of the people to get jabbed with an experimental gene therapy that has not been properly tested (it takes a minimum of 4-5 years to do that). Nothing like governments looking after your health.

Overseas, Goldman sees positive signs. That won’t hit Australia for a long time, though. International borders are likely to stay closed for a long time.

“Internationally we continue to see positive progress. While uncertainties caused by the Delta variant remain and flight searches have come off from a high in early July into August, we note that Airport passenger traffic data remains encouraging. The US TSA data for passenger checkpoints track at c. 78% of pre-pandemic levels MTD in August 2021 vs. the same period in 2019 signaling the recovery continues to be strong. Although this is lower than c. 79.5% in July 2021 vs. July 2019 potentially due to the Delta outbreak slowing the recovery, it is reassuring that the decline hasn’t been hard.

“Overall, while the Delta outbreak has potentially caused a break in the pace of travel recovery globally, we note that our expectations for recovery when we first initiated on the travel stocks were for international travel to start in mid CY21 and gather pace over CY22. Given the vaccination rates in most developed western countries and the decoupling of infections vs. hospitalization rates in high vaccination economies, we believe the recovery, ex ANZ will remain in line with prior expectations. Although current data trends remain ahead of expectations, we maintain caution given the short term Delta uncertainty.”

Problem is, those ‘vaccines’ are not doing what they are supposed to do, eliminate the cases. In cact, any effect seems to last only 6 months, hence the need for boosters (Israel is already mandating the third jab and considering the fourth). A lot of uncertainty lies ahead.


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