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Travel Ban Thrashing Airline Stocks

Airline stocks will have a serious test following the 30-day travel ban implemented by the Trump Administration. COVID-19 created a nationwide panic resulting in hundreds of workers being laid off. American Airlines (AAL) resulted in a 5.5% decrease in the past week along with other airlines such as United Airlines (UAL), Southwest Airlines (LUV), Spirit Airlines (SAVE), and Delta Airlines (DAL).

The industry is suffering during this financial crisis, with only hope that over the next months there will be a gradual increase. The last time Airlines took this big of a hit was on 9/11 with nearly a 40% decrease.

What can investors be looking for in the next couple of months? First of all, investors need to be patient until the virus beings to recede. Secondly, the bond market is important to monitor. Along with most bonds being sold this afternoon, there are no severe signs of trouble in the near future. Taking a look into the unencumbered assets of many of the Airlines makes investors a little uneasy if the coronavirus does not begin to recede.

March 14, 2020

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