Investors rush to buy travel stocks after the vaccine announcement as coronavirus spread has devastated the travel and tourism sector in the past two quarters. Delta Air Lines (NYSE: DAL) stock price hit multi months high while other US airline logged double-digit gains on vaccine hopes. Cruise stocks also reported massive gains, with shares of Royal Caribbean (NYSE: RCL), and Norwegian Cruise Line (NYSE: NCLH) soared almost 30% on Monday.
Fundamentals strengthened for Airline stocks
Airline stocks experienced massive losses throughout this year as virus spread has forced governments to limit domestic and international traveling. United Airlines stock is down almost 50% so far this year while Delta Air Lines shares fell 40% year to date. US airlines have also reported historic losses in the second and third quarters of this year, with expectations that losses will extend into the final quarter. However, the vaccine announcement has changed the future fundamentals for airline companies. Pfizer says they will provide 50 million vaccine doses globally by the end of this year, with plans of supplying 1.3 billion doses in the next year.
Airlines will capitalize on pent-up demand
The market analysts are of the opinion that there is a significant volume of pent-up travel demand as people and businesses have suspended plans due to virus spread. This means airline companies are likely to see a big boost in revenue from next summer. Analysts say the vaccine hopes would immediately improve domestic flights while a full recovery for international traveling would take a longer time.
