WASHINGTON/CHICAGO (Reuters) - American Airlines Group Inc AAL.O shares jumped more than 40% on Thursday after announcing a big boost to U.S. 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% at $16.72 on the bullish announcement in very heavy trading, though still down 45% 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 U.S. carrier, also announced on Thursday the outcome of an early out program 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 Chief Executive Doug Parker said in a memo to employees.
Still, the airline will fly more than 55% of its July 2019 domestic capacity next month and also boost its international flights schedule, flying nearly 20% of its July 2019 schedule.
By comparison, American flew just 20% of its domestic schedule in May and is flying 25% 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,” Raja said, noting American has been operating a larger schedule than U.S. rivals.
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 U.S. and foreign carriers are also adding flights to summer schedules as demand increases.
In total, American plans to fly 40% 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 plans to resume service to additional European and Latin American destinations in August, and to Rio de Janeiro, Brazil, from Miami on July 7.
Reporting by David Shepardson and Tracy Rucinski; Editing by Christopher Cushing, Steve Orlofsky and Tom Brown
Our Standards: The Thomson Reuters Trust Principles.