While many investors are loth to invest in airline equities, by employing a pair trade, investors can mitigate some of the inherent risk associated with aviation companies. Like in any other sector, it’s always a good idea to be long a thriving company and short a struggling one when creating a pair trade.
Over the past few weeks, a host of U.S. airlines reported earnings, with the majority beating expectations. Investors can potentially extrapolate an investment thesis in emerging market carriers from these results.
Because developed market airline stocks have traditionally underperformed other sectors, investors frequently overlook emerging market counterparts — such as Panamanian based carrier COPA.
Emerging Money author Jonathan Yates made a number of compelling points as to why airlines from developed nations mostly make for terrible investments. However, investors and traders alike can find a lot to like about emerging market airlines.
Singapore Airlines reported its first quarterly loss in more than two years this week on the back of higher fuel costs, weak demand from Europe, and increased competition from rapidly expanding Middle Eastern carriers.