We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Cruises vs. Airlines: Which Industry Will See Faster Recovery?
Read MoreHide Full Article
Travel and tourism industry has been brought to a grinding halt in the wake of the COVID-19 pandemic. Airlines and cruises are particularly hard hit with many companies slashing jobs and salaries amid this chaotic environment. With demand touching record lows, many industry watchers already compared this plaguing crisis to the 9/11 aftermath.
American Airlines (AAL - Free Report) and Delta Air Lines (DAL - Free Report) recently decided to furlough employees through voluntary exit programs, buyout packages and layoffs in response to the financial doldrums. Per American Airlines management, there arises a need to shed about 30% of the top brass and its support staff because of the carrier’s shift to operate through a smaller structure. Further, Delta Airlines and United Airlines (UAL - Free Report) chose to trim their workforce.
Moreover, cruise operator Carnival Corporation (CCL - Free Report) , which currently carries a Zacks Rank #3 (Hold), laid off 820 personnel in Florida with an additional staff of 537 being placed on temporary furlough for up to six months to survive the turbulent business scenario. Royal Caribbean Cruises Ltd. (RCL - Free Report) and Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) also announced plans to terminate 26% (of its U.S. workforce) and 20% of headcount, respectively.
Amid the continuing economic turmoil, the Trump administration announced a $2-trillion relief bill to rescue the coronavirus-hit U.S. economy. Although this financial aid came as a breather for the cash-strapped airlines, offshore-based cruise lines could not qualify for such federal bailouts. Per the package, U.S. airlines received funds worth $25 billion. However, none of the three major cruise operators, namely Carnival Corp., Royal Caribbean and Norwegian Cruise Lines will be eligible for emergency grants as is the rule in other nations.
Road to Recovery: Sooner for Cruise Lines or Airlines?
Until the intensity of coronavirus subsides, it is difficult to ascertain when the travel and tourism industry will bounce back. Most airlines expect travel demand to revive the pre-pandemic spike not before 2023. The industry, which saw severe disruptions due to the pandemic, is now seeing a slow-but-steady uptick. But will cruise operators witness a recovery faster than their aviation counterparts?
With more states easing lockdowns and travel restrictions, major U.S. airlines seem to go on a capacity-expansion spree. The carriers recently announced plans to increase the number of domestic flights, ahead of the peak summer season to tap the holiday traffic. American Airlines, United Airlines, Delta Airlines and Southwest Airlines (LUV - Free Report) are all planning to fly 27% passengers more than their May schedule in June.
Although a certain frequency of air travel will be required for business or leisure activities, the same cannot be said for the cruise industry, which is considered a discretionary form of travel, solely. Comparing to other sectors, consumer confidence is shaken maximum in the cruise space and therefore demand for cruising will remain pent-up is still not clear.
The leisure industry has been grappling with the pandemic chaos as travel warnings and cruise cancellations are starting to take a toll on cruise lines. The players are thus offering modified booking and cancellation policies to woo hesitant cruisers to tide over this unprecedented situation.
Cruise ships are often dubbed “floating Petri dishes". Passengers aboard Carnival Cruise Line’s Diamond Princess in February were quarantined after testing COVID-19 positive. Poor ventilation and cramped quarters induce a higher chance of contracting coronavirus infection compared to other landscapes. Thus, restoring passenger optimism will be a key challenge. Hence more health precautions with stricter screening, improved sanitation and better evacuation procedures command immediate attention.
Even though the travel industry failed to capitalize on the springtime vacations, airlines and cruise players are hopeful of salvaging the crisis with extensive summer trips. Carnival already claims to have registered strong 2021 bookings, translating to the cruise industry recovery by mid-2022 while airlines don’t foresee a full rebound until 2023.
Given how the pandemic will permanently influence the spending power of consumers, cheaper cruises have an upper hand over quicker but costly air travels. Looking at the big picture, whether cruise lines are poised to turn around at a faster pace or airlines, resurrection of business activity is ultimately a welcoming change for the travel industry.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
Image: Bigstock
Cruises vs. Airlines: Which Industry Will See Faster Recovery?
Travel and tourism industry has been brought to a grinding halt in the wake of the COVID-19 pandemic. Airlines and cruises are particularly hard hit with many companies slashing jobs and salaries amid this chaotic environment. With demand touching record lows, many industry watchers already compared this plaguing crisis to the 9/11 aftermath.
American Airlines (AAL - Free Report) and Delta Air Lines (DAL - Free Report) recently decided to furlough employees through voluntary exit programs, buyout packages and layoffs in response to the financial doldrums. Per American Airlines management, there arises a need to shed about 30% of the top brass and its support staff because of the carrier’s shift to operate through a smaller structure. Further, Delta Airlines and United Airlines (UAL - Free Report) chose to trim their workforce.
Moreover, cruise operator Carnival Corporation (CCL - Free Report) , which currently carries a Zacks Rank #3 (Hold), laid off 820 personnel in Florida with an additional staff of 537 being placed on temporary furlough for up to six months to survive the turbulent business scenario. Royal Caribbean Cruises Ltd. (RCL - Free Report) and Norwegian Cruise Line Holdings Ltd. (NCLH - Free Report) also announced plans to terminate 26% (of its U.S. workforce) and 20% of headcount, respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stimulus Packages to the Rescue
Amid the continuing economic turmoil, the Trump administration announced a $2-trillion relief bill to rescue the coronavirus-hit U.S. economy. Although this financial aid came as a breather for the cash-strapped airlines, offshore-based cruise lines could not qualify for such federal bailouts. Per the package, U.S. airlines received funds worth $25 billion. However, none of the three major cruise operators, namely Carnival Corp., Royal Caribbean and Norwegian Cruise Lines will be eligible for emergency grants as is the rule in other nations.
Road to Recovery: Sooner for Cruise Lines or Airlines?
Until the intensity of coronavirus subsides, it is difficult to ascertain when the travel and tourism industry will bounce back. Most airlines expect travel demand to revive the pre-pandemic spike not before 2023. The industry, which saw severe disruptions due to the pandemic, is now seeing a slow-but-steady uptick. But will cruise operators witness a recovery faster than their aviation counterparts?
With more states easing lockdowns and travel restrictions, major U.S. airlines seem to go on a capacity-expansion spree. The carriers recently announced plans to increase the number of domestic flights, ahead of the peak summer season to tap the holiday traffic. American Airlines, United Airlines, Delta Airlines and Southwest Airlines (LUV - Free Report) are all planning to fly 27% passengers more than their May schedule in June.
Although a certain frequency of air travel will be required for business or leisure activities, the same cannot be said for the cruise industry, which is considered a discretionary form of travel, solely. Comparing to other sectors, consumer confidence is shaken maximum in the cruise space and therefore demand for cruising will remain pent-up is still not clear.
The leisure industry has been grappling with the pandemic chaos as travel warnings and cruise cancellations are starting to take a toll on cruise lines. The players are thus offering modified booking and cancellation policies to woo hesitant cruisers to tide over this unprecedented situation.
Cruise ships are often dubbed “floating Petri dishes". Passengers aboard Carnival Cruise Line’s Diamond Princess in February were quarantined after testing COVID-19 positive. Poor ventilation and cramped quarters induce a higher chance of contracting coronavirus infection compared to other landscapes. Thus, restoring passenger optimism will be a key challenge. Hence more health precautions with stricter screening, improved sanitation and better evacuation procedures command immediate attention.
Even though the travel industry failed to capitalize on the springtime vacations, airlines and cruise players are hopeful of salvaging the crisis with extensive summer trips. Carnival already claims to have registered strong 2021 bookings, translating to the cruise industry recovery by mid-2022 while airlines don’t foresee a full rebound until 2023.
Given how the pandemic will permanently influence the spending power of consumers, cheaper cruises have an upper hand over quicker but costly air travels. Looking at the big picture, whether cruise lines are poised to turn around at a faster pace or airlines, resurrection of business activity is ultimately a welcoming change for the travel industry.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>