Market Overview

Treasury Cash Could Lift Airline ETF

Treasury Cash Could Lift Airline ETF

The U.S. Global Jets ETF (NYSE: JETS) is one of the exchange-traded funds rising to notoriety this year due in part to the Robinhood crowd and with plenty of help from Uncle Sam.

What Happened: The latter theme is back in play as the Treasury Department said late Tuesday it closed loans with seven carriers. In theory, there should be positive implications for JETS, the loan airline ETF, on multiple fronts.

For example, Delta (NYSE: DAL) and Southwest (NYSE: LUV), which combine for over 20% of the JETS roster, aren't taking Treasury loans because those carriers have other means of financing. That's freeing up Uncle Sam's cash for other JETS components that need it.

Why It's Important: Among the seven airlines reach deals with the Treasury Department are American Airlines (NASDAQ: AAL) and United Airlines (NASDAQ: UAL). That pair combines for nearly 20% of the JETS lineup as well. For financially flimsy American, the Treasury assistance is another lifeline.

“American last week said it secured $5.5 billion from the program, more than the $4.75 billion it had expected to receive. The Fort Worth-based carrier said it expects it will have up to $7.5 billion available, the maximum amount for a single carrier,” reports CNBC.

Other recipients include Alaska Air (NYSE: ALK), Frontier, JetBlue (NASDAQ: JBLU), Hawaiian (NYSE: HA) and SkyWest (NASDAQ: SKYW). Excluding Frontier, those other names combine for over 14% of JETS' weight.

What's Next: As for what's next for many JETS' holdings, the answer is clear: either more cash from the government or a massive amount of job cuts. With Election Day just weeks away, airlines are going to leverage that. They and the candidates know the industry employs thousands of workers in a batch of swing states, from Arizona to Pennsylvania and many more.

As for JETS, the impact on the ETF remains to be seen, but investors are devoted to the fund as highlighted by $1.55 billion in year-to-date inflows. And devoted they are because investors have pumped more than $453 million into the ETF this quarter.


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