Airline Stocks Surge as American Joins United in Giving Strong Outlook

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Airline Stocks Surge as American Joins United in Giving Strong Outlook
Credit: © Reuters.

By Geoffrey Smith -- U.S. airline stocks took flight in premarket on Thursday as American Airlines (NASDAQ: AAL ) joined rival United in giving a strong outlook for the spring and summer quarters. 

By 7:30 AM ET (1130 GMT), American Airlines stock was up 10.6% at its highest in six months, while United Airlines (NASDAQ: UAL ) stock was up 8.5% at its highest since February. Delta  (NYSE: DAL ) and Southwest  (NYSE: LUV ) stock were both up more than 3%, while JetBlue (NASDAQ: JBLU ) stock was up 4.9%.

American said it will return to profitability in the current quarter, flying at between 92%-94% of its pre-pandemic capacity levels. It sees revenue being between 6%-8% above the comparable quarter in 2019, "based on current trends".

It already posted a record sales figure for March, which drove first-quarter revenue to $8.9 billion, some 3% ahead of consensus forecasts. The airline's adjusted net loss of $2.32 a share was also slightly better than a consensus forecast of $2.44, and was barely half of the $4.32 loss a year earlier. 

United, meanwhile, had said late on Wednesday that it expects to be profitable this year, thanks to the return of business travel for the first time since collapsing two years ago at the start of the pandemic.

Airline stocks already received a boost at the start of the week when a Federal judge threw out the mask mandate that the Biden administration had sought to impose on flights as part of its Covid-19 health measures. Restrictions both in the U.S. and across most of the world have been relaxed in recent months as successive new dominant strains of the disease have mutated into something less virulent and aggressive than its early strains. 

"Demand for domestic business travel has steadily improved as offices have reopened and travel restrictions have been lifted," American said. "Revenue from small- to medium-size businesses and customers traveling for a mix of business and leisure remains very strong and is approaching a full recovery, and corporate bookings are the highest they have been since the start of the pandemic."

It also noted that demand for international travel has also picked up considerably.

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