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An unseen silver lining due pilot shortage?

All about Airlines and Airliners.
 

DXing 16 Oct 22, 09:42Post
I've relegated myself to a masochistic watching of the business networks lately. Watching my retirement portfolio take one body blow after another. On one of the shows a guest had what I thought was a unique take on the current pilot shortage and the airlines.

According to this guest, the pilot shortage is actually benefiting the airlines as it has forced capital expenditure discipline on them. According to the guest, in the past airlines were usually late to invest capital, usually at the peak of any economic cycle, and then were in trouble financially when the inevitable lull occurred. This time round, coming out of the pandemic, airlines were unable to rapidly expand either routes or operations due to the lack of pilots. This may well have saved them from what is the generally agreed upon upcoming financial recession. Part of his reasoning is that several stock analysts have still rated a number of airline stocks as "strong buy" even though they slightly missed their earnings revenue estimates in this past quarter. This was due to the fact that seats are still full, since there are simply less of them.

Domestic and international business travel is picking up, albeit still below pre-pandemic levels, but that doesn't really matter either as flights are still below pre-pandemic levels of operations. I can slightly attest to this in an anecdotal fashion, I've tried to get to EDI a couple of times over the summer and not only weren't there any seats, but the flights were also over sold. Some of this is families traveling to see relatives for the first time in a couple of years, but BF was full as well as coach. Even now, depending on the day of the week, EDI can still be full.

So, continuing with the guest's thesis, a continuing pilot shortage in the short term will be a good thing for the airlines from a financial point of view. At least through 2023 and perhaps into 2024. He ventured to tie higher airline stocks due to less flying to higher auto profits due to less cars available and now the oil companies have figured out that less pumping/refining equals better profits as well. Not sure about all that. I think the chip factory fire in Japan as well as the Biden administration regulations as well as the war in Ukraine have had more to do with auto and oil prices than anything those industries have consciously done.

I've attached a couple of links that would tend to support the guests thinking indirectly. Note, I'm not trying to suggest buying or selling anything, just an interesting take on where the airlines sit as a potential economic recession takes hold. Thoughts?

https://markets.businessinsider.com/news/stocks/these-2-delta-air-lines-analysts-remain-bullish-despite-earnings-miss-1031806596

https://www.defenseworld.net/2022/10/16/cowen-upgrades-delta-air-lines-nysedal-to-outperform.html

https://seekingalpha.com/news/3883675-corporate-travel-is-picking-back-up-watch-these-stocks
What's the point of an open door policy if inside the open door sits a closed mind?
 

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