Airline stocks rally, Americans cite intention to pay off loan
FORT WORTH, Texas (AP) – Airlines shares rose on Monday, driven by signs that vaccine deployments could trigger a rebound in travel later this year.
American Airlines, meanwhile, announced plans to raise $ 7.5 billion by borrowing against its frequent flyer program and using the funds to pay off a federal loan it received almost a year ago, at the start of the pandemic. The airline said the shares would not increase its overall debt. It follows similar movements from Delta Air Lines and United Airlines.
Fitch Ratings said U.S. liquidity has improved more than expected due to federal loans and money to help cover payroll – aid that was extended in December and would get another renewal as the measure COVID-19 relief passed by the Senate over the weekend.
“Meanwhile, the rollout of several effective coronavirus vaccines has increased the likelihood of a significant rebound in air travel from some time in 2021, reducing the likelihood that Americans will continue to burn money for an extended period, ”Fitch said.
American burned about $ 30 million in cash per day in the fourth quarter.
Fitch warned, however, that air traffic remains weak and the pace of the recovery is uncertain.
Airlines have been hit particularly hard by the pandemic, and travel restrictions continue to eliminate most international flights, which normally represent a lucrative part of their business.
But there have been signs of improvement in domestic travel. After a dismal January, passenger numbers have since followed an upward trend. On Sunday, the Transportation Security Administration screened nearly 1.3 million people at US airports. While that percentage was down 41% from the comparable day in 2019 before the pandemic, it was better than the 58% average drop this year from 2019.
American Airlines shares ended up 5% on Monday. United rose 7%, Southwest Airlines gained 6.4% and Delta tacked 3.6%.
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