U.S. Airlines See ‘With Legs’ Recovery, Shares Rise To Pre-pandemic Levels

(Reuters) – U.S. airline executives on Monday pointed to concrete signs of a resumption of domestic pleasure travel as a pandemic downturn drives spring and summer bookings, pushing shares to their highest level since that the coronavirus crisis hit the industry a year ago.

FILE PHOTO: A United Airlines airliner takes off with New York in the background, at Newark Liberty International Airport, New Jersey, United States, December 6, 2019. REUTERS / Chris Helgren

“We are certainly seeing the start of what looks like a very big increase,” said American Airlines CEO Doug Parker, one of several CEOs speaking at a JP Morgan conference.

Ted Christie, CEO of low-budget airline Spirit Airlines, said the recovery seemed “to have legs.”

Executives cited data showing that U.S. vaccinations against COVID-19 are accelerating and have exceeded the number of positive cases, which are on the decline.

As of Sunday, 21% of the American population had received at least one dose of a vaccine.

As a result, people are booking vacations and visiting friends and relatives, helping to slow the pace of expected first-quarter income declines, even as business and international travel remains depressed.

Airlines shares began to drop dramatically on February 21, 2020, as the pandemic spread, reaching a low on May 14 and gradually increasing since then to the current high.

United Airlines plans to end its consumption of cash in March, said CEO Scott Kirby, the first major carrier to say it could leapfrog the industry. In January, United said an average daily core cash consumption of $ 19 million in the fourth quarter would likely continue into early 2021.

The positive trend in core cash consumption is expected to continue after March, assuming the current trajectory of reservations remains in place, Kirby said. Core cash consumption excludes debt and severance pay.

United shares jumped 9% and the Dow Jones US Airlines index [.DJUSAR] climbed more than 4%.

Delta Air Lines is “cautiously optimistic” about the possibility of stopping its consumption of cash this spring, said CEO Ed Bastian.

Delta said it will use cash for second-quarter aircraft purchases and expects first-quarter revenue decline to be at the low end of its forecast of 60%. at 65% compared to the same quarter in 2019, before the start of the pandemic.

Southwest Airlines estimated lower cash consumption in the first quarter and lower operating revenue for March than previously expected.

JetBlue Airways also forecast a slowdown in the decline in revenue in the first quarter, projecting a decline of between 61% and 64%, compared to the same period in 2019. It had previously forecast a decline in revenue in the first quarter. 65% to 70% business.

American, the most indebted U.S. airline, has said it is no longer looking to raise financing after a $ 10 billion debt deal last week and expects to have more than $ 17 billion in cash at the end of March.

More than 1.3 million passengers were screened at U.S. airports on Friday and Sunday, according to Transportation Security Administration data, the highest number since the pandemic crushed air travel in 2020.

“I think we’re near the end of the virtual world,” United’s Kirby said.

Reporting by Tracy Rucinski and Sanjana Shivdas; Additional reports from Ankit Ajmera; Edited by Louise Heavens, Paul Simao, Jonathan Oatis and Aurora Ellis


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