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With VFR Travel Coming Back, Airlines Getting Vote of Confidence from Banks

Flyers at airport wearing face masks

Investment firms are getting much more bullish on airline stocks, after preliminary numbers suggest “visiting friends and relatives” travel is coming back to the forefront. Bank of America and Raymond James have raised price targets for certain airline stocks, as the demand for travel is quickly returning.

Airlines who invested in VFR – or “Visiting Friends and Relatives” travel – could be in for big financial gains in the coming months. Marketwatch reports both Bank of America and Raymond James are expressing optimism for the aviation sector as more flyers book domestic tickets.

Visiting Friends and Relatives to Lead Charge, with Business Travel Recovering by 2021 End

The analysis by both financial institutions suggest that the current gains will create tailwinds for airlines coming into the summer months. Analysts for Bank of America raised their price targets for four major carriers: Alaska Airlines, Delta Air Lines, JetBlue and Southwest Airlines.

Throughout 2020, airlines made a number of moves which would help them relaunch in the next year. At the height of the pandemic, JetBlue leaned heavily into the recovery of leisure travel by announcing new routes focused on reconnecting families, followed by entering a partnership with American Airlines. Southwest expressed equal optimism with an increased order for Boeing’s 737 MAX aircraft, while Alaska Airlines said they would attempt to fully integrate into the Oneworld alliance by the end of 2020.

In separate guidance, Raymond James said that the current trends were “encouraging.” But even though airlines have recovered faster than other categories, the Easter holiday and trouble with COVID-19 variants could make an impact on the recovery.

“We expect investors … (to) focus on overall revenue and cash flow recovery with earnings season commentary likely encouraging heading into the peak summer season,” the analysis from Raymond James read, according to Marketwatch. “Potential risks include possible bookings recovery moderation between the Spring Break/Easter and summer travel periods and more resistant COVID variants gaining a foothold.”

Improved Outlooks Come After American Posts Near-2019 Numbers

The renewed excitement for an air travel recovery comes after American announced they were seeing increased bookings. In a regulatory filing, the Fort Worth-based carrier said their most recent seven-day bookings average were around 90 percent of the same time in 2019.

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