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Why Southwest, JetBlue, and United Airlines Stocks Are Soaring This Morning

By Rich Smith - Apr 5, 2021 at 12:45PM

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CDC gives a near-green light to fully vaccinated domestic travelers.

What happened

Airline stocks are having a good Monday, with shares of Southwest Airlines (LUV -2.97%) and American Airlines (AAL -5.61%) both up 2.8% in 11:55 a.m. EDT trading and JetBlue (JBLU -3.47%) rising 4.6%.

It's not hard to figure out why. On Good Friday last week, when markets were closed, the U.S. Centers for Disease Control issued new guidance for Americans wanting to travel after receiving their COVID-19 vaccines -- and today is the first day investors got a chance to trade on the new information.

2 airplanes flying in opposite directions towards each other

Image source: Getty Images.

So what

Citing "recent studies evaluating the real-world effects of vaccination," the CDC declared Friday that "fully vaccinated people can travel at low risk to themselves."

The CDC clarified that "a person is considered fully vaccinated two weeks after receiving the last recommended dose of vaccine," but noted that at that point, travelers no longer need to undergo "COVID-19 testing or post-travel self-quarantine" to travel. The CDC did, however, qualify that statement by saying travelers should continue "wearing a mask, avoiding crowds, socially distancing, and washing hands frequently."  

That being said, the CDC's guidance appeared to refer primarily to domestic travel within the U.S.

The CDC's announcement was more heavily loaded with caveats regarding international travel. To wit:

For outbound international travel, the CDC will not require proof of a negative coronavirus test for vaccinated travelers boarding outbound flights -- but their destination country may.

After they fly back to the U.S. from abroad, the CDC will not require vaccinated travelers to self-quarantine, but the state or local jurisdiction at which they arrive may impose such a requirement.

Furthermore, even vaccinated travelers must show a negative COVID-19 test before boarding a flight back to the U.S. And three to five days after arriving back in the U.S., they must take another COVID-19 test.

Now what

Despite the caveats regarding international travel, on balance investors seem to be taking the CDC news as a positive development, and good news of a loosening of travel restrictions on domestic flights at least. The easier it becomes to travel anywhere, the more people are likely to travel, and the more revenues airlines stand to gain -- and the closer they can get to becoming profitable again.

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Stocks Mentioned

JetBlue Airways Corporation Stock Quote
JetBlue Airways Corporation
$9.88 (-3.47%) $0.35
Southwest Airlines Co. Stock Quote
Southwest Airlines Co.
$42.09 (-2.97%) $-1.29
American Airlines Group Inc. Stock Quote
American Airlines Group Inc.
$15.81 (-5.61%) $0.94

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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