Airline shares surge as buyers shrug off 1000’s extra flight cancellations

Airline pilots walk over Ronald Reagan Washington National Airport in Arlington, Virginia on December 27, 2021.

Anna Money Maker | Getty Images

Airline investors shrugged thousands of dollars Flight cancellations over the holidays, even if disruptions worsened on Monday.

Airlines scrubbed more than 2,900 U.S. flights on Monday, in addition to more than 5,400 over the weekend, largely due to the severe winter weather that has handicapped some of the country’s busiest airports from Seattle to Washington DC and a spike in Covid -Infections among flight crews. Operations appeared to be improving, however, with 306 flight cancellations scheduled for Tuesday.

Over the holidays, including porters Delta Airlines, United Airlines and JetBlue Airways Said crews were increasingly sick from the rapidly spreading Omicron variant of Covid. The Federal Aviation Administration also warned of delays as their employees increasingly tested positive for the coronavirus.

Delta said it expects to cancel about 200 flights a day out of about 4,000 daily departures on Tuesday and Wednesday.

United, spirit and Alaska are among the airlines that offered their crews additional payment for travel pickup to alleviate the disruption.

From Christmas Eve through Tuesday, airlines have canceled more than 18,700 US flights, according to FlightAware. More than 12% of Saturday’s scheduled flights were canceled when a winter storm hit the Midwest, and nearly 11% of Sunday flights were also scrubbed.

But airline stocks rebounded on Monday, a sign that investors look to the rest of the year when travel demand is expected to rise. American shares rose 4.4% to $ 18.75, United gained 3.9% to close at $ 45.49, and Delta rose 3.1% to end at $ 40.29.

Shares in Southwest Airlines, which canceled hundreds of flights in the past few days, rose 2.7% to end the day at $ 44. The Dallas-based airline canceled another 605 flights, or 16% of its schedule, on Monday, according to FlightAware. Southwest said bad weather had dislocated planes and crews and some employees were unable to work at a regular pace.

“The cancellation of hundreds of flights is disrupting our entire operating system,” the airline said in a statement on Monday. “The storm cleared Denver, for example, but the extreme cold requires additional security protocols for our people working out there, slowing operations, causing delays and forcing some cancellations to keep the whole system moving.”

The cost of the disruptions is not yet clear. Vacation time was critical for airlines, whose executives anticipated some of the busiest days since the pandemic began.

The Omicron variant could pose a “modest, short-term risk” for airlines due to staff quarantines and the potential for some customers to delay travel, Citigroup airline analyst Stephen Trent wrote on Monday.

“Even so, higher vaccination rates and new antiviral treatments are just a few of the factors that could make negative, knee-jerk stock price reactions to the advent of future variants appear increasingly unreasonable,” he wrote.

Delta publishes the sector’s quarterly earnings reports on January 13th.

Southwest CEO exams optimistic for Covid days after unmasked Senate listening to with different airline chiefs

Doug Parker, CEO of American Airlines, Gary Kelly, CEO of Southwest Airlines, and Scott Kirby, CEO of United Airlines, say during a Senate hearing on Commerce, Science and Transportation on Capitol Hill in Washington, DC on December 15 2021.

Chip Somodevilla | Swimming pool | Reuters

Southwest Airlines CEO Gary Kelly tested positive for Covid-19 after a Senate hearing with other airline chiefs earlier this week, the airline said on Friday.

Kelly, along with the CEOs of United Airlines and American Airlines, Delta Airlines” Chief of Operations and President of the largest flight attendant union in the country, testified personally for more than three hours At the Senate Commerce Committee hearing on Wednesday afternoon over $ 54 billion in federal payroll slips the airlines spent trying to get out of the pandemic. Witnesses and lawmakers did not wear masks during the hearing. Most of the other participants wore face masks.

“Although Gary tested negative several times before the Senate Commerce Committee hearing, he tested positive for COVID-19 after returning home, showing mild symptoms and a PCR test,” a Southwest spokeswoman said in a statement. “Gary is fine and is currently resting at home. He was fully vaccinated and received the booster earlier this year. Gary’s symptoms remain mild and he is getting closer to a full recovery each day.”

United boss Scott Kirby, who was Kelly’s left in the hearing, tested negative for Covid on Friday, according to a person familiar with the matter. American boss Doug Parker tested negative on Friday, a spokeswoman said.

Delta’s chief of operations, John Laughter, who testified at the hearing on Wednesday and sat two seats away from Kelly, tested negative on Thursday and Friday.

“He will continue to carry out tests and take other precautions if necessary,” the airline said in a statement.

To Laughter’s left sat Sara Nelson, President of the Association of Flight Attendants.

“I was advised by Gary Kelly shortly after he tested positive and, ironically, just as I was getting back to work after the booster,” she said in a statement. “I follow CDC protocols and will test multiple times within the recommended period of 5-7 days and before I go on vacation with my family.”

Senators questioned witnesses about recent flight disruptions, airline hiring issues, 5G, as well as vaccination and mask requirements.

When Senator Roger Wicker (R-Miss.) Asked airline CEOs during the hearing whether they assumed that passengers would not have to wear masks on board, Kelly promoted the effectiveness of the air filtration and circulation systems on board and said, “Me think the case is very strong that masks don’t add much to the air cabin environment. “

The Biden government has been requiring bus passengers to wear face masks since February, although airlines requested them in spring 2020 with the start of the pandemic. Earlier this month, the Biden government extended the mandate until March 18.

On Friday, Kelly softened his tone and said he supported the federal mandate.

During the hearing, “I mistook some for a short answer to a question about masks,” he wrote in a staff note in which he also disclosed his positive Covid result. “So, to be clear, me and Southwest and together with [U.S. airline lobbying group] Airlines for America are all coordinated and support the current federal mask mandate at airports and in airplanes.

“The majority of our employees and customers feel that it’s an important layer of protection, and I definitely agree,” he continued. “So we continue to rely on the advice of our medical experts about the need for masks. And I apologize for the confusion!”

Doug Parker, CEO of American Airlines, Gary Kelly, CEO of Southwest Airlines, Scott Kirby, CEO of United Airlines, John Laughter, executive vice president of Delta Air Lines, and Sara Nelson, international president of the Association of Flight Attendants-CWA, say before the Senate Committee on Commerce, Science, and Transportation in the Russell Senate Office Building on Capitol Hill in Washington, December 15, 2021.

Chip Somodevilla | Swimming pool | Reuters

American Airlines CEO Doug Parker said, “I agree,” immediately following Kelly’s response at the hearing, but the company issued a statement Thursday saying it would “approve of the comments made by other witnesses about the high quality of the Aircraft Cabin Air “agree and did not question the need for face masks on airplanes.”

Parker later posted a lengthy statement on his Instagram account saying the airline supported the mask mandate and that he “should have been more explicit in my answer to a question that misrepresented American’s position on the mask mandate has”.

Air travel is one of the industries hardest hit by the pandemic. In the meantime, demand has recovered, primarily thanks to domestic leisure travel. Delta and United executives announced this week that they are preparing Busy end of the year holiday season, despite the prevalence of the Omicron variant.

Air journey optimism boosts Asia-Pacific airline shares

Qantas A380 will take off from the runway in Saxony, Dresden on August 21, 2020

Tino Plunert | Image Alliance | Getty Images

SINGAPORE – Asia Pacific airline stocks traded Tuesday after numerous announcements significantly improved the outlook for international air travel.

Stocks of australia Qantas Airways rose 2.55% during Air New Zealand Share rose 6%.

Those stocks rose when New Zealand Prime Minister Jacinda Ardern announced that the “travel bubble” between her country and Australia would begin on April 19th.

Meanwhile, the Singapore Aviation Authority announced that the country will begin accepting travelers using the country from May International Air Transport Association (IATA) mobile passport for pre-departure checks. Shares of Singapore Airlines rose 0.2% on Tuesday.

“The trust of a leading airline such as Singapore in the IATA Travel Pass is extremely important,” said Willie Walsh, IATA general manager, in a statement.

“With ongoing testing, we are on track to see that the IATA Travel Pass is a critical tool in restarting the industry by providing governments with verified travel health information. And travelers can have full confidence that their personal information is secure and be under their own control, “said Walsh.

Elsewhere, Korean Air Lines stocks were flat, while Japanese airline stocks lagged the broader region. Japan Airlines meanwhile fell by 2.44% ANA Holdings fell 2.19%.

Local media reported about it quasi emergency Covid-19 measures were implemented as of Monday in several prefectures in Japan to contain a resurgence of infections.

The aviation industry is among the sectors hardest hit by the coronavirus pandemic as authorities tightened border restrictions around the world to contain the spread of the virus.

Indian airline IndiGo expects to achieve pre-Covid capability by end-2021

SINGAPORE – India’s low-cost airline IndiGo may struggle with its international operations, but the division could fully recover by the end of the year, the airline’s chief executive told CNBC this week.

Ronojoy Dutta from IndiGo, which is operated by InterGlobe Aviationsaid the split between domestic and international segments for the airline was a “story of two cities”.

The domestic recovery has been strong, while the overseas recovery has brought “all the challenges of Covid and testing and quarantine,” he told CNBC “Street Signs Asia” On Monday.

The country last week extended a ban on international commercial passenger flights until the end of February. Local trips were allowed to resume in May.

IndiGo is a low cost airline that mainly operates domestic flights India’s largest passenger airline.

Aircraft operated by Go Airlines Ltd. and IndiGo, a unit operated by InterGlobe Aviation, will be on display at Terminal 3 of Indira Gandhi International Airport in New Delhi, India on Sunday, June 28, 2020.

T. Narayan | Bloomberg | Getty Images

“We’re only struggling with 28% of our capacity from Covid,” he said of international flights. However, domestic activities have reached 80% of the prepandemic level.

“I think we should reach 100% inland capacity by April at the latest,” Dutta predicted. “Internationally will open more slowly, but by the end of the calendar year 2021 we should also be at the level before Covid internationally.”

This forecast is more optimistic than other airline executives. Tony Fernandes, CEO of AirAsia, told CNBC Passenger capacity is unlikely to reach pre-coronavirus levels by 2023.

Emirates President Tim Clark said in November The airline aims to return to profitability in 2022.

“Growth opportunities”

IndiGos Dutta also sees the airline’s prospects as positive after the end of the coronavirus situation.

“Once the pandemic crisis is behind us, we see many growth opportunities,” he said.

He said India has very little air traffic penetration and there will be “a large amount of pent-up demand” when the economy recovers.

“Is international [an] even brighter picture, “he said, adding that profit margins are higher for international flights.

Dutta said he sees “plenty of room for growth” in traveling to and from countries within a six- to seven-hour flight from India such as Russia, Egypt, Malaysia and China.

“We are very excited about these growth prospects and, as you know, there is a major fleet expansion coming up,” he said. “I just itches to come and see until 2022 [to] continues to grow rapidly. “

– CNBC’s Saheli Roy Choudhury, Dan Murphy and Emma Graham contributed to this report.