Stock Market Article Analysis

Stock Market Article Analysis

Key words and Definitions

  • Financial forecasting – predicting a future value or values.
  • Cash flows – cash inflows or outflows associated with a business, investment, or event.
  • Pro forma financial statements – forward looking or forecasted financial statements.

Summary: Key Points in the Article

The United States officially eased travel restrictions and began allowing fully vaccinated international travelers to enter its borders. Investors expected this move and airline stocks moved sharply higher throughout the month. Both American Airlines and Delta Air Lines’ stock prices are up over 13% in the first week of November.

International air carriers report full flights to the U.S. as European travelers flock to visit for the first time they have been able to enter the U.S. in almost 20 months. Experts hope the move will begin an international shift to allow travel and “live alongside Covid-19 instead of trying to eliminate transmission.”

Travel website Expedia also reported third quarter 2021 revenues were up by 97% compared to the same quarter in 2020. Delta Air Lines CEO Ed Bastian remained cautious about full recovery and stated it “will continue to be choppy.” However, he also pointed out that momentum was building to lift international travel restrictions in many countries which would help the industry recover.

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Thinking Critically Questions:

  • Why the Airline Industry carries on the financial planning and what are some important considerations in the financial planning?
  • Why is it important for a financial manager to forecast short-term sales in this industry?
  • Why is it important for a financial manager to forecast long-term sales in this industry?
  • Why are stock prices increasing in this industry?

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