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Wednesday's Market Minute: Can Congress Save The Airlines?

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Wednesday's Market Minute: Can Congress Save The Airlines?

Airlines continue to suffer from the coronavirus outbreak, as shares of major carriers fell more than 30% in the past two weeks before sharply rising on Tuesday. The airlines unveiled a reduction of domestic and international flight capacity, and announced they will suspend 2020 outlooks. American Airlines Group Inc (NASDAQ: AAL) said it will reduce international capacity for the summer peak by 10%, which includes reductions of 55% in trans-Pacific capacity and 7.5% in domestic capacity.

AAL also suspended or reduced flights to China, Italy, Paris, Barcelona, and other cities. Delta Air Lines Inc. (NYSE: DAL) announced the reduction of international flights by up to 25% and international capacity by up to 15%, as well as halting hiring and offering employees voluntary unpaid leave. United joined its peers, reporting a 70% drop in domestic demand in the last few days. Incoming CEO Scott Kirby said the company’s net bookings have collapsed in Asia and Europe, and that United is expecting to cut May flights by 20%.

Kirby said he foresees disruptions “to be at least as large or larger until we see concrete signs of returning demand.” However, airlines were among the strongest gainers in Tuesday’s market revival. American Airlines’ was one of the biggest leaders in the S&P 500, closing nearly 15% higher. The move came after President Trump announced intentions to offer assistance to the airline and cruise industries. But, the president didn’t offer specifics, so it’s unclear what shape the aid will take. But for the time being, airline stocks look like they could be grounded as markets wane again today.

Image by David Mark from Pixabay

 

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