Shares of General Electric (NYSE:GE), Triumph Group (NYSE:TGI), and Atlas Air Worldwide (NASDAQ:AAWW) all closed higher after Tuesday trading, with GE stock up a respectable 4.3%, but Triumph Group rising 10.4%, and Atlas Air winning the race with an 11.5% sprint higher.
What do these three stocks have in common?
General Electric makes engines for both of the world's largest airplane manufacturers, Boeing and Airbus. Triumph doesn't service Airbus, but it does supply Boeing with parts comprising large portions of that manufacturer's airplanes. And Atlas Air is of course a charterer of airplanes -- both for cargo and for passengers.
Thus, all three of these companies stand to gain from an improvement of the dire situation now facing the world's airlines, which in the past few months have been forced to ground the majority of their fleets in response to weak demand from customers in the Age of Coronavirus.
And things may be improving, albeit at a snail's pace.
According to a report on Flightglobal.com on Tuesday, the International Civil Aviation Organization has just published new guidelines "to support the restart and recovery of global air travel in a safe, secure and sustainable way." Recovery won't be immediate, but progressing instead through five stages -- and getting a plan in place is the first step.
Meanwhile, here at home, CNN reported Monday that air traffic began "bouncing back" from pre-pandemic levels in May, with passenger traffic through U.S. airports actually doubling over the course of the month, from levels earlier in the month (albeit off of an exceedingly slim base).
That being said, I'm not sure things have gotten quite so good as to justify stock price jumps of 10% and more in stocks tied to the air travel industry. After all, even the heaviest flying day in May saw traffic down 86% from one year ago, and despite the increase in passengers, most airlines are still flying planes far too empty to turn a profit on their flights.
That doesn't bode particularly well for a near-term increase in sales of airplanes, or the engines to fly 'em, or the parts needed to build 'em. It doesn't bode well for Atlas Air's business of chartering out its planes, either.
In the meantime, all three of these companies continue to struggle under heavy debt loads -- nearly $1.5 billion net of cash in the case of Triumph Group, $2.7 billion in net debt at Atlas, and a crushing $57.2 billion debt load at GE. While I get that investors are searching for any bit of good news, any reason to feel optimistic, I can't help but think: Too soon.
This recession is a long way from over, yet.