Airline ETF Takes Off as Countries Lift Quarantines, Resume Air Travel

Airline sector-related exchange traded funds soar as European and Asian countries plan to lift quarantine measures on air travelers in a bid to bolster their pummeled tourism industries.

The U.S. Global Jets ETF (JETS), the lone ETF dedicated to the airline industry, was among the best performing non-leveraged ETFs of Tuesday, jumping 11.8% and breaking back above its short-term resistance at the 50-day simple moving average.

Airline stocks have gained some speed since mid-May on signs that people are tentatively booking flights again ahead of the busy summer season, the Wall Street Journal reports.

Furthermore, world governments have helped prop up the ailing air industry and are now easing travel restrictions in Europe and parts of Asia.

“Opening up is coming more quickly than anticipated by some investors,” Seema Shah, chief strategist for Principal Global Investors, told the WSJ. Still, “the sector looks cheap, but it’s cheap for a reason.”

Leading the charge on Tuesday, German travel operator TUI AG shares surged close to 40% in London after Chief Executive Officer Fritz Joussen said in an interview with the Rheinische Post over the weekend that there are plans to resume overseas flights and holidays by the end of June.

The tourism industry, notably air travel, has been heavy hit by strict shutdown restrictions to contain the spread of the novel coronavirus or COVID-19, which has grounded large fleets of airlines and caused the furlough of a large portion of their workforce.

“It would be hard to argue that traffic is going to come back and normalize in the next few months, but there are signs that we may be past the worst,” Adrian Yanoshik, an analyst covering U.S. and European airlines at Berenberg Bank, told the WSJ. “These companies are pretty distressed, so anything that improves their short-term solvency is going to be read positively.”

For more information on the airline ETF, visit our Airline category.