John Menzies (MNZS) offers ground services, air cargo services, fuelling services, and more. The bulk of its business comes from airline customers, which means you could class Menzies as a picks and shovels play on the airline industry. It doesn’t matter much about the profits of the airlines so long as they are still in business to pay.
Unfortunately, the abrupt halt of global travel has also put a spanner in the works of Menzies’ trading. And the current situation looks very different to six months ago, when we were still in the first lockdown; back then the virus was thought to be easing and not as bad as people had initially feared, and the expectation was that life would return to normality as the year rolled on. But cases are now flaring up and hospitals are again under strain, and although vaccine has been mobilised and is now being rolled out, it will be months before a significant proportion of the population has been vaccinated.
The daily run rate of new cases is currently 200,000, and this is expected to increase. I believe this is now the most important key metric for traders and investors to focus on. Once the vaccine starts to make exponential gains in reducing rates in the elderly, cases and deaths will come quickly down and alleviate immediate pressure on the health system. That means this must surely be the last lockdown - this pandemic has been brutal, but life must go on, and business must continue.