Asian airlines rally as American Airlines lifts hopes of resumed travel

[TOKYO] The fledgling recovery in Asian airline stocks caught an updraft on a bullish outlook from one of the world's largest carriers.

Shares of airline companies in the region surged on Friday, following gains in US peers after American Airlines Group said it would increase July flights by 74 per cent compared with this month, suggesting that travellers may be returning more quickly than expected. The US carrier's stock skyrocketed 41 per cent, the most on record, pushing its market cap back above US$7 billion.

Korean Air Lines surged as much as 18 per cent, after adjusting for a rights issue, leading advances in Asia Pacific peers. Air China gained as much as 8.4 per cent and Cathay Pacific Airways rose 5.7 per cent in Hong Kong, while Japan Airlines (JAL) gained 8 per cent and Australia's Qantas Airways 7.4 per cent. On the mainland, China International Travel Service climbed as much as 8.2 per cent, Shanghai International Airport 4.1 per cent and Guangzhou Baiyun International Airport 3.4 per cent.

With the coronavirus outbreak appearing to be largely contained in many countries, headlines and announcements related to the lifting of travel restrictions is music to the ears of airline companies pummeled by lockdowns. The Bloomberg Asia Pacific Airlines Index has advanced 17 per cent since bottoming in late-March.

China will begin easing restrictions on foreign airlines starting June 8, changing course after the Trump administration demanded it reopen to US companies or face curbs on its own carriers flying passengers to America. The Nikkei reported that Japan will waive its two-week quarantine for business travellers from countries where border restrictions have been eased, provided they prove they have tested negative for the coronavirus.

Nomura Holdings said in a report Thursday it assumes passenger numbers will recover to pre-pandemic levels next fiscal year for Japanese airlines. It maintained its buy rating on JAL, while cutting peer ANA Holdings to neutral saying its "share price appears to reflect coming recovery".

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