JetBlue and Spirit Airlines Just Got Much-Needed Good News
Just a few months ago, it looked like 2020 could be a banner year for the U.S. airline industry. Instead, the COVID-19 pandemic has sparked an existential crisis for many airlines. Revenue dried up almost completely, causing the companies to begin burning cash at a rapid pace. Not surprisingly, airline stocks have plummeted.
However, while all airlines are hurting right now, there could be some long-term winners from the crisis. Rising debt levels, near-term losses, and the likelihood that margins will remain weak in 2021 will force many airlines to retrench, prioritizing their best markets and shrinking in non-core markets. That could open up long-term growth and margin expansion opportunities for other carriers.
Southwest Airlines (NYSE: LUV) is looking to seize these opportunities, recently announcing an ambitious plan to return capacity to near 2019 levels by November. Yet even as it returns to a fairly normal schedule, it is making significant cutbacks in some markets -- most notably, Fort Lauderdale and Orlando, Florida. That could be great news for low-cost rivals JetBlue Airways (NASDAQ: JBLU) and Spirit Airlines (NYSE: SAVE).
Source Fool.com
