Market Overview

Southwest, United Start To See Signs Of Relief For Airline Industry

Southwest, United Start To See Signs Of Relief For Airline Industry

On Tuesday, United Airlines Holdings Inc (NASDAQ: UAL) said air travel demand moderately improved in the first half of May, and Southwest Airlines Co (NYSE: LUV) reported positive net bookings for the same period.

“The company's month-to-date net positive bookings represent a reversal in the net negative booking trends experienced during the majority of March and April 2020, where trip cancellations outpaced new passenger bookings,” Southwest said in an 8-K filing.

“The company has also recently experienced a modest improvement in passenger demand and bookings in June 2020.”

Southwest Slows Cash Burn 

The airline industry had burned $10 billion a month as lockdowns and travel restrictions stunted March and April bookings. Major players capped their losses by cutting up to 90% of their flight schedules.

Taking recent demand improvements into account, Southwest said it expects June cash burn to slow from between $30 million and $35 million to the low $20-million range. 

What’s Next For Airlines 

Southwest is expanding its flight schedule in June to staunch annual capacity decline at just 45% to 55% compared to May’s decline of 60% to 70%. United said it expects capacity trends to improve from 90% drops in May and June to a 75% drop in July.

Meanwhile, Delta Air Lines, Inc. (NYSE: DAL) insiders told Reuters that the company would add more flights to meet demand as cabin capacity remains capped at 60%.

Airline executives are speaking at an industry conference Tuesday to expound on the state of air travel.

LUV, UAL, DAL Price Action

United Airlines shares were trading 2.11% higher at $24.64 at the time of publication

Delta shares were up 2.45% at $22.40 and Southwest shares were trading 5.58% higher at $28.56.

Related Links:

Boeing's CEO On Coronavirus Impact On Travel, 737 MAX Update, Bond Offering

All The Bad News From Airlines This Week: 'Travel Demand Is Essentially Zero'


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