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American Airlines soars 41% as plan to add July flights sparks relief rally
[WASHINGTON] American Airlines Group shares jumped more than 40 per cent on Thursday after announcing a big boost to US flights next month following dramatic cuts caused by the coronavirus pandemic, as well as some leadership changes to cut costs.
American shares ended up 41 per cent at US$16.72 on the bullish announcement in very heavy trading, though still down 45 per cent since mid-February. The stock had lost more than its peers due to its higher debt load and fears of a sluggish recovery. While analysts cheered signs leisure demand is picking up, they warned that business and international travel could remain depressed for around three years.
American, the largest US carrier, also announced on Thursday the outcome of an early out programme for management, saying 14 officers will be leaving the company. "As we plan for a post-coronavirus recovery, we know we will be living with the effects of the pandemic for some time," American Airlines chief executive Doug Parker said in a memo to employees.
Still, the airline will fly more than 55 per cent of its July 2019 domestic capacity next month and also boost its international flights schedule, flying nearly 20 per cent of its July 2019 schedule.
By comparison, American flew just 20 per cent of its domestic schedule in May and is flying 25 per cent in June, said Vasu Raja, American Airlines' senior vice president of network strategy.
"As an airline, we've consciously bet on demand coming back. We have bet the economy," Mr Raja said, noting American has been operating a larger schedule than US rivals.
Mr Raja told Reuters the airline would fly just over 4,000 flights on peak days in July compared with nearly 2,000 on peak days in May. That is still down from the peak 6,800 daily flights before the crisis.
Other US and foreign carriers are also adding flights to summer schedules as demand increases.
In total, American Airlines plans to fly 40 per cent of July 2019 capacity, boosting flights from New York City airports, Los Angeles and Washington as well as its Dallas Fort Worth and Charlotte hubs. It is also increasing flights to major cities in Florida, Gulf Coast cities and mountain destinations as national parks and outdoor recreational spaces reopen.
American Airline plans to resume service to additional European and Latin American destinations in August, and to Rio de Janeiro, Brazil, from Miami on July 7.