American Airlines prompted a surge in shares across the US sector on Thursday after it said it would fly more than half of its domestic flight schedule in July.
The Fort Worth-based airline’s stock rose more than 40 per cent to close at $16.72, its highest since March 10, following the announcement it would restore flights to destinations such as Florida’s theme parks and the west of America.
American will also fly nearly 20 per cent of its international schedule next month. It said its choice of routes to Florida, Montana and Colorado reflected pent-up demand for holiday travel.
“We’re seeing a slow but steady rise in domestic demand. After a careful review of data, we’ve built a July schedule to match,” said Vasu Raja, senior vice-president of network strategy at American.
“We’ll continue to look for prudent opportunities to restore service so our customers can travel whenever and wherever they are ready.”
United Airlines shares climbed over 16 per cent, Delta Air Lines increased 14 per cent and Southwest Airlines rose 5 per cent. All remain far below their pre-coronavirus levels, however; the 52-week high for American Airlines, for example, was $34.99,
Savanthi Syth, an analyst at Raymond James & Associates, said after signs of greater appetite for risk from investors in recent days, early enthusiasm over American’s move may have caused a short squeeze in the stocks.
“While it is encouraging that we are heading in the right direction, I didn’t view American’s comments as significantly different than what we have been hearing from others,” she said.
On Thursday, Virgin Atlantic also confirmed its plans to restart passenger flights as lockdown measures ease, with five international routes taking off from Heathrow in mid-July.
Virgin services to Orlando, Florida and Hong Kong will resume from July 20 this year, the airline announced on Thursday, followed by routes to Shanghai, New York JFK and Los Angeles on July 21.
It is set to announce more destinations for August flights in the next two weeks, beginning a gradual increase in passenger flying in the latter half of the year and in 2021.
Juha Jarvinen, chief commercial officer at Virgin Atlantic, said it was “looking forward” to welcoming passengers as “the Covid-19 crisis stabilises and demand slowly returns”.
The moves are the latest steps toward a gradual return to business in an industry devastated by the coronavirus pandemic.
Several airlines have said they will recommence flights for the crucial summer season as governments weigh up loosening travel controls introduced during lockdown.
EasyJet announced this week it would restart 50 per cent of its European routes in July and 75 per cent in August, while Wizz Air is already flying about 10 per cent of its capacity and plans to run up to 70 per cent of flights in July and August. Ryanair is restoring 40 per cent of its scheduled flights on 90 per cent of routes from July 1.
However, flying post lockdown will look much different than before the coronavirus crisis. Carriers have introduced stringent hygiene measures, including cleaning and social distancing at check-in, and face masks, surface wipes and hand gel for passengers.