Boris Schlossberg, managing director of FX strategy at BK Asset Management, agreed that airlines had a tough road ahead.
"If you think about the airline business, 10% of travel is business travel, and that's responsible for 75% of profits. And ... most business travel just simply isn't happening," Schlossberg said in the same "Trading Nation" interview.— or, for those who must travel, renting or buying fractional shares of jets or finding other means of transport — turning a profit is getting more and more difficult for airlines, he said.
"Given that dynamic where you basically have to chase the lowest common denominator, that very, very price-sensitive customer, [it's] very tough to make money," he said. "Within that parameter, though, I think, probably because they're just insisting on quality and maintaining that everybody must wear a mask and creating a standard of trust, is an interesting pick."
Schlossberg also flagged Southwest Airlines, which he said "can execute within this very, very challenging environment" and doesn't rely heavily on business travel. "But for United and some of the bigger ... carriers, I just can't see how they can make up in volume what they're losing in profit margin going forward," he said.Short sellers have taken interest in airline stocks during the market's recovery. Nearly 9% of United Airlines' float was sold short as of Tuesday, while American Airlines had the highest short interest in the S&P 500 at over 28%.
TradingNation Totally agree, airlines are facing turbulence and a rough road ahead. This is the space I would approach with caution due to the capital intensive, fixed high cost nature of the business. Long-term I like $DAL & $LUV but I still think the group will struggle with profitability.
TradingNation Lowest TSA Travel count yesterday. Lowest in 3 weeks
TradingNation Stocks still green. Uuupppp man.
TradingNation Avoiding airline stocks should be a lifelong goal of any serious investor.
TradingNation That’s what Warren Buffett was doing months ago and now you rely on traders ?
TradingNation stoolpresidente
TradingNation
TradingNation Ya think!
TradingNation History showed that when you go against what cnbc reports you end up making money :) No joke.
TradingNation Avoid airline stocks. Fullstop.
STARLINKOPTIONS TradingNation Bullish
TradingNation Well, not if you bought at the MAR/APR low. Anything from there is Lambo money!
TradingNation no sh*t
TradingNation Don’t avoid at all. In fact pay much attention. These are levels you won’t see at this opportunity probably ever again.
TradingNation Airlines about to get crushed
TradingNation To many mask mandates to fly as soon as they remove that and have it say MASK OPTIONAL YOUR CHOICE!!! End game!!
FastMoney TradingNation Kinda wanna do the opposite. I may have a problem.
TradingNation Not for the long term.
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