Travel Ban Partially OK'd: What's In Store For Airlines?
Zacks Investment Research | Jun 26, 2017 10:37PM ET
In what can be seen as a victory for the Trump administration, the U.S. Supreme Court has reinstated major parts of the President’s travel ban. While allowing major parts of the embargo to take effect , the court said that it will be up for review in October.
The Ruling
The country’s top court ruled in favor (partially) of the U.S. government’s request to do away with preliminary injunctions against ban. Consequently, visitors from six predominantly Muslim nations - Iran, Libya, Somalia, Sudan, Syria and Yemen - are banned from entering the U.S. for 90 days.
The court also upheld the provision of the ban to suspend the admission of refugees for four months. Additionally, the ruling restricts the number of refugees entering the country to 50,000 this fiscal year. In fact, While making the above rulings, the court added that visitors from the above countries to the U.S. won’t be affected if they are able to prove a bona fide relationship with a person or entity in the country.
We remind investors that initially President Trump issued a ban on travelers from seven predominantly Muslim nations – Iraq, Iran, Syria, Yemen, Sudan, Somalia and Libya – from entering the U.S. in January. However, courts refused to reinstate the ban. Notably, following the opposition, a narrower version was issued by the President in March.
What’s Ahead for Carriers?
The partial reinstatement of the ban, which is aimed at preventing terrorism in the U.S., negatively impacted airline stocks like Delta Air Lines (NYSE:DAL) , United Continental Holdings (NYSE:UAL) and American Airlines Group (NASDAQ:AAL) due to fears of declining travel demand. All these three carriers carry a Zacks Rank #3 (Hold). You can see forecast CASM (excluding fuel and other special items) following the pay-related agreement with the pilots of its subsidiary Horizon Air.
Apart from high costs, carriers such as United Continental Holdings and Spirit Airlines (NASDAQ:SAVE) have been laid low by customer-related issues.
Transportation - Airline Industry 5YR % Return
Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.