"I am greedy when others are fearful, and fearful when others are greedy." Recently, the incident of Berkshire reducing its holdings of Delta Airlines and Southwest Airlines shocked the industry. Buffett's wise words are also Encountering a crisis of confidence. Buffett also claimed in March that he would not sell airline stocks, but the plight of the US airline industry caused a 180-degree turn in his attitude.
Looking back at the domestic aviation industry, after the resumption of work and production, the recovery of domestic routes has just begun to appear. On March 26, the Civil Aviation Administration of China issued another notice, requiring all airlines to implement the policy of one flight per country, one flight per week, which will undoubtedly give airlines bring greater variables.
Judging from the general expectations of institutions, domestic routes in June this year are expected to reach the level of last year, while for international routes, optimistic expectations will be postponed to August.
The current situation of the Chinese and American aviation industryPK
Due to the strengthening of prevention and control and concerns about the new crown epidemic, American AirlinesThe number of passengers has dropped sharply recently. According to data released by the U.S. Federal Transportation Security Administration, as of March 30, in the past week, the average daily air passenger volume in the United States was only 210,000, accounting for only 8.7% of the same period last year.
(Data source: US Federal Transportation Security Administration, Zhongtai Securities Research Institute)
Overseas network news shows that according to the US "Capitol Hill" report, US President Trump html said on the 21st that he was considering suspending flights to the United States. Domestic flights in areas severely affected by the epidemic to curb the spread of the new coronavirus.
Trump also said restrictions on domestic travel could seriously harm the aviation industry. Under the epidemic, due to restrictions on international flights, the US aviation industry is being impacted. "We are certainly considering restricting domestic flights, but once we do that, we are really suppressing an industry that desperately needs it."
It is worth noting that on April 4, Trump declared Wisconsin a "major outbreak" of the new coronavirus. "Disaster Area". So far, 36 states, the capital, Washington, D.C., and 4 overseas territories in the United States have been declared as "major disaster areas" due to the new coronavirus pneumonia epidemic.
At present, the United States has not made a final decision to restrict domestic flights, but the development of the epidemic in the United States has intensified. According to real-time data from Johns Hopkins University, as of 6:30 on April 5, Beijing time, the cumulative number of confirmed cases in the United States has reached 308,533, making it the first country in the world to have more than 300,000 confirmed cases for three consecutive days. More than 30,000 new cases were reported in a single day.
Compared with , the US aviation industry is likely to usher in a "double kill" of domestic and international business. China's aviation industry has already improved. In particular, after the orderly resumption of work and production, domestic airlines have gradually resumed domestic routes and increased investment in flights since late February.
However, currently domestic routes still face at least two risk factors, one is passenger load factor, and the other is ticket price.
From the perspective of passenger load factor, in February this year, the overall supply and demand of the five A-share listed airlines (the three major state-owned airlines, Spring Airlines, and Juneyao) fell by 70.0% and 82.2% year-on-year respectively, and the passenger load factor was 50.5%, a year-on-year decrease of 34.6 percentage point. As domestic routes gradually resume, institutions generally expect February to be a low point in demand, but the recovery of passenger load factor needs to be disclosed in March operating data.
Ticket prices are another uncertain factor. At the end of February and early March this year, the fares of some routes of many airlines were sold at cabbage prices. According to OTA platform data, prices for the same routes rebounded in April, for example. In the picture below, the lowest fare on the Shenzhen-Chongqing route in March is generally 50 yuan.
Although prices have rebounded month-on-month, it cannot be ignored that compared with the same period last year, air ticket prices have dropped to freezing point. Taking the Beijing-Shanghai route as an example, the reporter selected the historical prices of Air China and Eastern Airlines flights. It can be found that the current prices are at historically low levels.
Let’s look at international routes again. In order to curb the risk of imported epidemics from overseas, on March 26, the Civil Aviation Administration of China issued a notice requiring each domestic airline to maintain only one route to any country, and each route should be operated every week. The number of flights shall not exceed one; each foreign airline can only maintain one route to my country.
Judging from the data in February, the performance of international routes of the three major domestic airlines was due to the relatively small decline in supply and demand of domestic routes, while the passenger load factor was relatively high. However, due to the outbreak of overseas epidemics, the situation faced by international and domestic routes has reversed, and international routes have become a major uncertainty factor for domestic airlines. Data from Southwest Securities shows that under the current policy of “one flight, one country, one flight per week”, international traffic has dropped by more than 95%.
As for the timing of airline recovery, Caixin Securities predicts that airlines’ domestic flight operations are expected to gradually recover in June, while international flight operations are expected to gradually recover in August. The reporter noted that judging from the judgments of many institutions, there is a basic consensus that domestic routes will return to the same level as last year in June, but the timing of the recovery of international routes is still quite cautious.
It is worth mentioning that in order to support the development of the civil aviation industry, the country has introduced a number of policies, such as exemption from civil aviation development funds, halved social security collection, international route subsidies, airport fee concessions and other policies. It is expected that the three major airlines will each receive Profits exceeded 1 billion yuan.
Is there still a chance for the aviation sector?
Regarding Berkshire’s reduction of holdings in Delta Air Lines and Southwest Airlines, it should be pointed out that Buffett did not liquidate all of his airline stocks. In addition, Oriental Harbor Chairman Dan Bin believes that this move may not be Buffett’s own decision, but may be made by one of Buffett’s two successor investors.
Will Berkshire's reduction of holdings cause a new round of psychological impact on the air transportation sector, and do airline stocks still have investment value? Let’s first take a look at the performance of domestic air transport stocks since the Spring Festival.
stock price performance often includes changes in fundamentals and expectations. At the beginning of this year, due to the impact of the COVID-19 epidemic, demand in the global aviation industry shrank significantly. Global airlines have drastically reduced their capacity, revenue has dropped sharply, and there has even been a liquidity crisis. In addition, due to the introduction of travel restrictions in many countries, passengers' demand and willingness to travel have been significantly reduced.
Recently, the three major domestic airlines have disclosed their 2019 annual reports, and all three major airlines have mentioned the impact of the COVID-19 epidemic.
Air China (601111) stated that due to the impact of the COVID-19 epidemic, domestic and international passenger volume has declined significantly in the short term. Affected by this uncontrollable factor, it is expected to affect the development of the aviation market for a certain period of time. However, Air China also stated that in the long term, business travel, tourism and vacation, etc. will continue to be the driving force for the expansion of the air transport market, and the growth rate of outbound passengers will exceed that of domestic passengers.
China Eastern Airlines (600115) stated that there is still great uncertainty about the duration of the epidemic around the world, which may amplify and delay the impact on the recovery of business travel demand. At the same time, there are significant uncertainties in the impact of the COVID-19 epidemic on the company's international and domestic businesses, and the overall impact on the company's full-year operations and financial status cannot yet be accurately estimated.
China Southern Airlines (600029) stated that as of the end of March, domestic air passenger demand has gradually recovered. However, due to the continued spread of the international epidemic and the tightening of international aviation restrictions, international passenger supply is expected to further decrease. The epidemic is expected to have an adverse impact on the company's production and operations, and the specific extent of the impact is uncertain.
reporters noticed that due to the impact of the new coronavirus epidemic, International Air Transport Association (IATA) has lowered its forecast for global air passenger demand in 2020, from a growth of 4.1% to a decline of 38%. IATA originally predicted that the global aviation industry revenue this year will reach 872 billion U.S. dollars, and the net profit of global airlines will be 29.3 billion U.S. dollars. However, its latest forecast shows that the global air passenger business revenue loss this year may reach 252 billion U.S. dollars (approximately 1.75 trillion yuan). ), down 44% year-on-year.
Since the three major airlines have disclosed their 2019 annual reports, many institutions have recently made adjustments to their profit forecasts.Taking Air China as an example, Essence Securities , Everbright Securities , Great Wall Securities , Caixin Securities and many other securities firms expect Air China to have negative EPS in 2020, with a loss per share ranging from 0.1 yuan to 0.16 yuan. ; Of course, some institutions predict that and Air China are still expected to achieve profitability this year, but the profit scale has been significantly reduced.
Tianfeng Securities pointed out in the analysis that under the impact of the new crown epidemic, civil aviation passenger flow has dropped significantly, and industry losses are expected to be inevitable in the first quarter. However, considering the low oil prices and the gradual recovery of domestic demand, we are not too pessimistic about the full-year performance. Moreover, after the short-term pain, due to the periodic and significant decline in the expansion speed of various airlines, as demand recovers, the industry is expected to see a significant gap between supply and demand. In addition, the epidemic The impact may lead to opportunities for consolidation in the industry, which will benefit the improvement of the supply structure. After the pain period, civil aviation is expected to welcome an investment window.
Although there are still differences about the situation in 2020, judging from the predictions of most institutions, by 2021 and 2022, the aviation industry will return to normal track. The current situation has given investors an opportunity to re-examine aviation stocks, but risk factors cannot be ignored, that is, whether the market's pessimistic expectations for the industry have been fully reflected in the stock price, and whether there will be further "black swan events" in the future. occur.
This article originates from e company’s official microblog
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