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With the reports of the new coronavirus variant, omicron, surfacing recently, the airline industry is again expected to suffer as nations revise travel entry rules and implement border restrictions. According to a Kyodo news report, the global airline industry is expected to remain unprofitable in 2022 with a combined net loss of $12 billion, because travel demand will remain subdued at below pre-pandemic levels.
Against this backdrop, we think it could be wise to avoid airline stocks Southwest Airlines Co. (LUV) and Mesa Air Group, Inc. (NASDAQ:MESA) because they have poor growth prospects and their valuations look stretched at their current price levels. Furthermore, they have been downgraded recently by analysts.
