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JETS ETF CEO: Airliners Set For 'Spectacular Earnings'

December 8, 2015 11:27 am
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  • Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, told Benzinga that airliners are set up to report “spectacular earnings.”
  • Holmes added that airline stocks have gained as of late following a notable dip in oil prices.
  • The airline and investment pro suggested that airliners will continue returning cash to shareholders through buybacks and dividend hikes.

U.S. Global Investors, a Texas-based investment advisory firm launched the U.S. global JETS ETF (NYSE: JETS) back in April.

The firm’s CEO, Frank Holmes, described the ETF when it was launched, noting that investors can better gain exposure to both domestic and international airlines. The strategy also allows the fund to also “dynamically take advantage” and offer some exposure to the growth of the middle class in the developing world that benefits international airliners.

Holmes: Airliners Are Going To Have ‘Spectacular Earnings’

Speaking to Benzinga, Holmes said that airliners are well positioned to report “spectacular earnings.” The investment and airline pro cited two reasons for his bullish stance: 1) a strengthened US economy (the fund has an 80 percent exposure to American airliners), and 2) low oil prices.

The ETF Holmes oversees recorded strong gains on Monday which was attributed to the near five percent drop in oil prices. Barron’s noted that since the fund was launched in April, it returned nine percent compared to a 0.7 percent drop in the S&P 500 over the same time period.

Holmes continued that as airliners save money on fuel costs, the companies can invest in their infrastructure. Specifically, he sees airliners investing in new jets, better start and landing times, and a boost to employ pay.

Holmes also added that airliners are well positioned to continue buying back their stock and increasing their dividend payout to investors. In fact, airliners have increased their dividend by 98 percent year-to-date, drastically exceeding the 14 percent overall average for S&P 500 companies.

Finally, Holmes suggested that airliners aren’t the only sector to benefit from lower oil costs. He pointed out that Delta Air Lines, Inc. (NYSE: DAL) strategically acquired an oil refinery – the first airliner to do so. He expanded that oil refiners have also benefited from lower oil costs due to the reduced input costs.

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