The travel boom cometh

BofA with the note:

The clouds are parting

The COVID Delta clouds are passing and the sun is starting to shine again. Our high frequency economic indicators are inflecting higher, the economic data surprise index has turned and the bond market has taken notice. We think 3Q will prove to be the soft patch in the year and growth will accelerate in the fourth quarter back to 6%. The risk – and it is a big one – is whether the supply side can handle the turn higher in demand.

Let’s start with the virus numbers as the Delta wave was the key culprit for the summer slowdown. The data are encouraging: the 7-day moving average of COVID cases was 108.8k in the week ending September 27, down 31.5% from the peak on Sep 1. Cases are down 16.3% week-over-week and falling particularly quickly (-22% w-o-w) in the South, which was hit the hardest. The high frequency economic data are also pointing to a turnaround in the leisure sector:

1. Seated diners on the OpenTable network are ticking higher at -9.4% from 2019 levels in the week ending Sept 28, above the recent low of -16.4% on Sept 13.
2. Total throughput of air travelers in US airports has improved while BAC aggregated card data shows a turnaround in spending on airfare, with the 2-year growth rate at
-21% vs. a low of -37% in early Sept (Exhibit 1).
3. According to Civic Science, the percentage of adults surveyed who say that they would be comfortable traveling or going on vacation ticked up to 50% in this past week vs. a low of 44% in mid-August (Exhibit 2).

MB Fund has been buying sips all year at home:

And abroad:

And now it is paying as Qantas mulls huge purchase of aircraft:

Qantas is circling Boeing 737 MAX and Airbus A320neo jets as the backbone of its domestic fleet for the next decade, with chief executive Alan Joyce urging whoever becomes NSW Premier to stay the course on the state’s COVID-19 reopening.

…The most significant announcement for Qantas from the conference was that it was nearing the final stages of multibillion-dollar orders for 100 jets to renew its ageing fleet of Boeing 737-800 and Boeing 717 domestic aircraft.

The travel boom cometh.