Airlane stocks were the first ones to suffer after the coronavirus outbreak in China. Naturally, tourism stopped, and people avoided flying. After the governments placed restrictions and forbade travelling, things went haywire for the whole tourism and travel sector. The damage was severe, but while some companies couldn’t cope with the consequences, others were old enough and strong enough to weather the crisis.
It seems that the pandemic is receding at last, and the majority of countries are lifting lockdowns. However, the ban on travel is still active in most cases. It will be some time until flights or cruises resume. But they will be restored, and when this happens, travel stocks will begin rising again.
If you plan your portfolio with long-term investing in mind, then now is a great opportunity to buy those travel shares, which would be hard-won due to their prices just a few months ago. Fortunately, they are trading very cheaply right now.
Why are Carnival Corporation and Southwest Airlines good choices?
Carnival Corporation has one of the highest-profile stocks in its sector. Before the pandemic, the company reported a $731 goodwill impairment charge in Q1 after publishing the value of its vessels. Carnival also endured several massive outbreaks of the disease on its Princess line cruises. All these drawbacks caused the stock to plunge by 70%. Despite that, Carnival has enough liquidity to stay afloat.
The company plans to resume the service soon. It also raised a huge amount of capital to help itself recover from the crisis. Even if Carnival can’t reopen business for some time, the company could easily make it through 2020, according to its CEO Arnold Donald.
Southwest endured more suffering during the last quarter. Warren Buffett announced his decision to sell his position in the company at the Berkshire Hathaway investor meeting on May 2. This news, atop the coronavirus crisis, sent Southwest plummeting down by 47%.
However, the company has been working for-profit for 47 consecutive years, and analysts think it will rally, thanks to its strong balance sheet and robust business model. Southwest also has a reputation for good customer service.