Why Jim Cramer Is Staying Away From Airline Stocks
The airline sector has been hit particularly hard by the coronavirus pandemic, as Americans are ordered to stay home and practice social distancing.
Let's go through the airline stocks and their performances in the past three months.
United Airlines is down over 64% in the past three months.
Delta is down over 60%.
Southwest is down over 34%.
JetBlue is down 49%.
American Airlines is down over 56%.
And, according to reports, Delta and United are thinking about selling off miles to raise up cash.
TheStreet's Rob Lenihan reported, "United Airlines Holdings and Delta Air Lines and their respective credit-card partners, JPMorgan Chase and American Express, have talked about selling miles ahead of schedule and for less than money to raise cash to weather the coronavirus pandemic."
Lenihan cited a Wall Street Journal report.
Now, airlines did get a boost from the $2 trillion relief package that was passed.
Scott Wagner, partner at Bilzin Sumberg broke down what airlines received:
"So for the passenger airlines, they've gotten 50 billion dollars. And 25 billion of that is essentially earmarked to cover salaries for airline employees. Pilots, you know, people that work on the runways, the baggage guys, flight attendants. And the other 25 billion dollars is in the form of loans to the airlines. But they'd be able to tap in order to get needed capital to stay running and probably again to build up. Once we're all out to leave our houses and start moving around the country again. I think it's also to keep the airlines flying. There are some people that still need to move around the country. We've all seen analytical evidence and social media where there are one or two people on flights, but some of those flights are actually very important and so part of that bailout money is to keep the planes in the air. And I suspect that if there's another package, there will be an additional bailout or additional funds available to the airline industries"
So, what does Jim Cramer think of the entire sector after all of this? Catch his take in the video above.