Airline stocks like American Airlines (AAL) and Delta Air Lines (DAL) took off in Thursday’s trading session after American Airlines said it will aggressively add back flights in July. It is among the signs that the slow recovery in air travel will gain speed this summer as states re-open their economies.
United Airlines (UAL) also announced plans to add back flights, saying it will resume about 130 nonstop routes in July that were suspended when travel collapsed as the coronavirus spread rapidly. United Airlines closed up 16 percent before it announced its plans to add back some flights. United will still operate only 30 percent of last July’s schedule.
In April, restrictions aimed at curbing the spread of the new coronavirus caused air travel to plummet to levels not seen since the 1950s.
American said it plans to operate 55 percent of the U.S. flights that it ran in July 2019. The airline only operated 20 percent of its schedule in April and May. Shares of American Airlines Group rose 41 percent to close at $16.72. That is the stock’s biggest one-day percentage gain since the current company was formed by a 2013 merger with US Airways.
Airline stocks in China
Airline stocks in China and the rest of the Asia-Pacific region have broadly advanced this week, with some recording double-digit gains on signs air traffic is coming back as global economies reopen following worldwide steps to control the coronavirus pandemic.
In China, the aviation index tracked by Wind Information gained 7.6 per cent this week.
China Southern Airlines has surged the most among the four largest Chinese airlines, shooting up 20.1 per cent this week in Hong Kong and 8.1 per cent in Shanghai. China Eastern Airlines soared 17.6 per cent in Hong Kong and 8.2 per cent in Shanghai. Air China jumped 16.6 per cent in Hong Kong, while Hainan Airlines added 1.9 per cent in the mainland.
The gains came as the International Air Transport Association said earlier this week that demand for air services bottomed out in April, while daily flights surged 30 per cent between the April 21 low point and May 27.
As many of the world’s economies speed up economic reopening, travel restrictions have increasingly been removed, driving the rally of airline stocks. American airline stocks surged overnight in Wall Street as investors shrugged off the frictions between China and the US and instead bet on American carriers’ resumption of flights to China.
China’s number of flights exceeds those of US airlines. Chinese airlines had the most flights in the world in May, thanks to a large domestic market with 244,400 flights. Air traffic for Chinese carriers is still down 39.4 per cent year over year, data from China-based aviation data VariFlight shows.
The gains were also seen in other parts of the Asia-Pacific region. The Bloomberg Asia-Pacific Airlines Index has advanced 17 per cent since bottoming in late-March.
This week, including intraday share prices Friday, Cathay Pacific has surged by 13.2 per cent. Korean Air Lines soared by 10.6 per cent this week. Japan Airlines edged up 2.3 per cent. Qantas Airways rose 5 per cent.
Should you buy stocks like American Airlines (AAL) and Delta Air Lines (DAL)?
Shares of these cruise stocks, overall, appear to be a very good investment option, with Wall Street analysts expecting its price to rise considerably in the next several years. The shares fell through support on fears of the coronavirus Covid-19 pandemic environment but the recent sell-off created an attractive opportunity to invest into this stock. The majority of the metrics point to this investment being highly attractive.
