U.S. airlines witness recovery taking shares to pre-pandemic levels
U.S airlines on Monday edged to strong signs of an industry recovering as the pandemic is slowing and driving spring and summer leisure bookings which are pushing shares to their highest level since the covid crisis hit the sector a year ago.
United Chief Executive Scott Kirby said not to think that we’re near the end of the virtual world in a conference at J.P. Morgan.
Airline executives said that with the increase in the U.S. COVID-19 vaccinations the number of positive cases is declining.
As a result, people are visiting friends and relatives, booking vacations, which is helping to slow the pace of expected revenue declines in the first quarter, they said.
From Feb 21, 2020, the shares started falling drastically as the pandemic spread, reaching a low on May 14 and slowly increasing since then to the current high.
United Airlines said it expects to break off its cash burn in March, sooner than the prediction. In January, United said an average daily core cash burn of $19 million in the fourth quarter would likely continue at the beginning of 2021.
Kirby said that the core cash burn is expected to continue after March as the positive trend continues, assuming the current bookings trajectory remains in place. United is the first to say it could hit the industry’s cash burn milestone.
In midday trading shares of United surged by 7% and the Dow Jones U.S. Airlines Index was up more than 3%.
CEO of Delta Air Lines, Ed Bastian is “cautiously optimistic” that it can halt its cash burn this spring. Delta said during the second half it will use cash for aircraft purchases and expects its first-quarter revenue decline to be at the low end of its forecast for a 60% to 65% decline from the same quarter in 2019, before the onset of the pandemic.
For March, Southwest Airlines measured lower cash burn in the first quarter and a lower decline in operating revenue than formerly predicted, though CEO Gary Kelly warned that business travel will remain depressed and may never recover to pre-pandemic levels in a Washington Post conference.
JetBlue Airways also is projecting a decline of between 61% and 64% in the forecast which is a slowing pace in its first-quarter revenue drop, compared with 2019 first-half. It had previously forecast a fall in revenue of 65% to 70%.
American Airlines, the most leveraged U.S. airline expects to have more than $17 billion of liquidity at the end of March.
According to Transportation Security Administration data, more than 1.3 million passengers were screened in U.S. airports on Friday and Sunday. This is considered to be the highest number since the pandemic crushed air travel in 2020.
