The FTSE 100 is the falling knife nobody has wanted to catch this week.
But for fear of sounding like Donald Trump, I still contend that every plunge is a buying opportunity. Falls have gone too far, and too fast, to represent the real long-term value of these companies.
So, easyJet and IAG will suffer a drop in bookings for a few months, but are these well-run, blue-chip businesses really worth a fifth less than a week ago?
Is easyJet so broken by coronavirus that its equity should be valued at less than the value of its fleet?
Surely not.
Both these businesses, despite the flu, have fortress balance sheets and low operating costs which will see them weather the storm and bounce back.
It may take a year or more, but it has to be worth a gamble that they will recover.
IAG is in the stronger position thanks to the global network outgoing chief Willie Walsh has created over the past decade. When demand for BA flights to Asia collapses, IAG can still make money in Latin America from Iberia.
The same financial strength and flexibility can’t be said for many in the industry.
You wouldn’t want to be an investor in Norwegian, which looks vulnerable despite its fortuitous January rights issue.
Nor, for that matter, would you want to be backing Flybe, whose business model doesn’t work in the best of times, let alone when its international transfer traffic vanishes. Except that, as a British taxpayer, you probably will, thanks to a likely government bail-out. Who knows how much that misadventure will end up costing us?
But if you pick your stocks carefully and don’t bet the farm, even airlines could prove a decent long-term investment in these worrying times.
As Warren Buffett puts it: be greedy when others are fearful. Time to grab that knife.
