American Airlines (AAL) plans a steep increase in July flights as coronavirus lockdowns are lifted and demand rises. United Airlines (UAL) is also reopening more flights. Airline stocks generally continued to rally Friday after skyrocketing on Thursday.
The routes with the biggest increase in flights are popular tourist spots, including cities in Florida, the Gulf Coast and mountain destinations in Montana, Colorado, Utah and Wyoming as national parts reopen. All 50 states and Washington have loosened lockdown restrictions.
International capacity next month will be nearly 20% of year-ago levels, leaving overall capacity at 40%. Previously, international capacity had been as low as 10%.
American returned service to eight international destinations Thursday including to routes to London, Amsterdam, Paris and Frankfurt and some Caribbean and South American routes.
The airline will also start reopening some of its airport lounges on June 22 but with limited capacity.
American Leads Rally In Airline Stocks
Shares shot up 11% to 18.59 on the stock market today, after reaching 22.80 intraday. AAL stock soared 41% Thursday. American Airlines stock has rebounded above its 50-day line but hit resistance at its 200-day line according to MarketSmith analysis.
Among other airline stocks, United shares rallied 8.45% Friday. Delta Air Lines (DAL), which said Wednesday it will keep social distancing measures in place through September, jumped 11%. Southwest (LUV) reversed to closed down 0.2%. Meanwhile, plane maker Boeing (BA) popped 11.5%.
After the close Thursday, United said it is resuming 140 previously suspended routes and expects to have July capacity at 30% of year-ago levels, up from a prior view of 2% and June capacity of 13%.
But overall, international demand also is still weak as countries implement mandatory quarantines for travelers or travel bans to curb the spread of the deadly Covid-19 virus.
And longer term, the top aviation industry executives have said it will take years for travel demand to return to pre-pandemic levels, continuing to weigh on airline stocks. Boeing’s CEO has predicted a timeline of two to three years.
Last week, American Airlines CEO Doug Parker said he expects the U.S. industry will be 20%-25% smaller next summer vs. 2019 but dismissed speculation that a major U.S. carrier will go out of business.
On Thursday, Moody’s Investor Services analysts warned in a report that global demand will “remain severely depressed in 2021, will not see a substantial recovery before 2023.”
— IBD