Airline stocks soared Thursday after American Airlines said it will aggressively add back flights in July – a bet that the slow recovery in air travel will gain speed this summer as states re-open their economies.
United Airlines also announced plans to add back flights, while taking a more cautious approach that includes resuming about 130 nonstop routes in July that were suspended when travel collapsed as the coronavirus spread rapidly.
Both airlines will run much smaller operations than they did last summer, but they could exceed the market’s low expectations for business during the crucial peak vacation season.
American said it plans to operate 55% of the US flights that it ran in July 2019, a huge increase over the 20% schedules it ran in April and May. The airline is more guarded about demand for foreign travel. It plans to operate just 20% of the international flights that it ran last July.
American could still cancel many July flights right up until departure time if hoped-for bookings fall through.
Shares of American Airlines Group Inc., which is based in Fort Worth, Texas, rose 41% to close at $16.72. That is the stock’s biggest one-day percentage gain since the current company was formed by a 2013 merger with US Airways. The shares are still down 42% so far this year.
Other airline stocks were carried along in American’s slipstream, although they rose by smaller percentages.
Chicago-based United’s shares closed up 16% before it announced its plans to add back some flights. United will still operate only 30% of its 2019 US schedule in July, but that is up from 13% in June.
Both airlines are adding flights to Florida, mountain states and other vacation destinations, indicating that leisure travellers are returning faster than people flying for business.
Bookings are still down everywhere, but they are down 80% in the Northeast compared with about 40% in states such as Texas and Florida that have reopened more of their economies, said Vasu Raja, American’s senior vice-president of network strategy.
“If you’re a leisure customer, you know you can go to Florida and the hotels will be open, the restaurants will be open,” he said. “You’re unclear if that will be the case if you go to California.”
In April, restrictions aimed at curbing the spread of the new coronavirus caused air travel to plummet to levels not seen since the 1950s. Some days, fewer than 100,000 people passed through US airport security checkpoints. The numbers have grown steadily since then, to roughly 300,000 people a day, but that is still nearly 90% below last year’s figures.
Source: Travel Industry Today
FLYING HIGH: US airline stocks soar