On March 15, United Airlines reported a 9% jump in their stock. The airline also reported that this month will most likely produce a “cash positive” month for them. United Airlines wasn’t the only one that experienced a positive jump. Other US Airlines including American Delta, Southwest, Alaska, and others saw a similar trend in their shares.
1.3 Million Americans Traveled by Air
Despite warnings from health officials, Miami officials reported college students traveling to Miami’s beautiful beaches for their spring break. CDC warned that there could be a surge in COVID19 cases after more than 1.3 million Americans traveled by air on March 12 alone. CDC director Dr. Rochelle Walensky even said that some people were even “maskless”.
Though this is bad news for health officials, the airline industry was looking forward to this increased demand for leisure travel.
Unfortunately, this jump won’t be enough to revive the industry completely. Leisure travel isn’t coming back soon. Most airline companies are still selling tickets at rock bottom prices. In addition to this, travel restrictions and risks are still stopping individuals from booking their flights. Without business travelers that are willing to pay higher for their fare, conventional airlines are less likely to recover their losses from last year.
Collectively, US airlines lost $35 billion in 2020. Compared to 2019, their revenue dropped by 60%. This is aggravated by the additional $67 billion in new debt from last year. In total, the industry has a total of $172 billion debt.
Much-Needed Respite for US Airlines
Spring break travel is a much-needed respite for the airline industry that suffered months of consecutive losses. However, looking at the bigger picture, this only brings a modest improvement in their numbers. As expected, shares of US airlines fell back the following day.
With COVID19 vaccinations, the worst for the industry may be over. However, Nick Calio, CEO of Airlines for America, believes that the airline industry recovery is still a long way to go. He said that “we’re still burning $150 million cash every single day”.
