The airline industry faced severe challenges due to the COVID-19 pandemic, causing a massive drop in global passenger demand and significant financial losses. 

Major U.S. airlines cut costs and received government aid but still suffered billions in losses. 

By 2022-2023, air travel recovered significantly, approaching pre-pandemic levels. 

Clear Secure (YOU), a company providing biometric identity verification at airports, saw aggressive growth but was impacted by the pandemic. 

As travel resumes, the company has expanded partnerships and continues to grow, though concerns remain about potential impacts from an economic slowdown.

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The airline industry has faced immense turbulence over the past few years. What was once a relatively stable sector has now encountered headwinds threatening even the strongest carriers.

The COVID-19 pandemic delivered an unprecedented blow in early 2020. With international borders closing virtually overnight, global passenger demand plummeted by over 90%.

Airlines slashed routes and parked hundreds of planes as billions in revenue vanished. Carriers large and small burned through cash reserves just trying to stay aloft.

It was undoubtedly the industry’s worst crisis ever.

Major U.S. airlines like American (AAL), United (UAL), and Delta (DAL) scrambled to cut costs through layoffs and early retirements. Even with $38 billion in government aid, the six biggest U.S. airlines combined lost over $34 billion in 2020 alone.

However, by 2022 and 2023, air travel had staged a strong recovery. With vaccination rates rising and restrictions easing in most countries, passengers returned to the skies in large numbers. 

Global passenger traffic in 2023 was only 10% below pre-pandemic levels in 2019 according to IATA estimates. Global passenger traffic in 2024 is predicted to surpass the 2019 level for the first time since COVID-19. 

This recovery presented opportunities for companies that support the aviation industry.

One such company benefiting from air travel’s recovery is Clear Secure (YOU). 

Clear Secure provides biometric-based identity verification services at airports across the United States through partnerships with the Transportation Security Administration (TSA), major airports as well as individual airlines. 

Through these partnerships, the company’s subscribers can verify their identity using their fingerprints or iris scans and bypass certain security screening steps like removing shoes or belts. 

This allows them to pass through TSA checkpoints in just a few seconds rather than waiting in long lines.

Clear Secure currently has over 22 million verified users and partnerships with over 90+ airlines at 200+ airports nationwide.

The company has seen aggressive growth but was hit hard when air travel came to a stop during the pandemic.

Now, with air travel recovering to pre-pandemic levels, Clear Secure has taken steps like partnering with companies like American Express, United Airlines, Hawaiian Airlines, and Alaska Airlines to offer their services to these partners’ customers. 

This is helping Clear Secure resume its growth trajectory.

Despite this, the market is concerned that an economic slowdown could lead to reduced travel and, therefore, negatively impact Clear Secure’s earnings. 

The company still has significant growth opportunities by partnering with more airlines and credit card companies, and through international expansion – opportunities that are not yet fully priced in its current stock price.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research