American’s shares soar 41% on volume of nearly 400 million shares after company expects flights in July to improve to more than half of last year’s capacity.
Shares of American Airlines Group Inc. soared to a record gain on record volume Thursday, to lead a broad rally in the airline sector, after the carrier indicated it was boosting capacity amid increasing signs that the worst of the COVID-19-related crisis was over.
The stock AAL, +41.09% rocketed 41.3% to the highest close since March 10, marking the biggest one-day percentage gain since it started trading in its current form in December 2013. The previous record rally of 35.8% was on March 24, in anticipation of the passage of a government bailout package.
Trading volume ballooned to 394.4 million shares, surpassing the previous record of 138.1 million shares on April 7, and compared with the full-day average of about 71.7 million shares.
The stock led the 30 of 33 equity components of the U.S. Global Jets exchange-traded fund JETS, +11.58% that rose Thursday, by wide margin. In second was Spirit Airlines Inc.’s stock SAVE, +21.43% which jumped 21.4%.
American said Thursday that it expects to fly in July about 55% of the domestic capacity that was flown during July 2019, as load factor improved 55% at the end of May from 15% for the month of April.
“We’re seeing a slow but steady rise in domestic demand,” said Vasu Raja, senior vice president of network strategy. “After a careful review of data, we’ve built a July schedule to match.”
American’s stock has now rocketed 59.4% this week amid a four-day win streak, which would be its biggest-ever weekly gain, topping the previous record of 35.3% for the week ended March 27.
The increasing demand American has seen is in sync with other industry data points, which suggest a continued bounce in travel demand off a bottom seen in April. The Transportation Security Administration (TSA) said that the daily average per week (through Sunday) of travelers going through its checkpoints has improved for six straight weeks, according to a MarketWatch analysis of government data.
An average of 305,358 people went through TSA checkpoints a day during the week ended May 31, or more than triple the low of 97,799 seen during the week ended April 19, as the COVID-19 pandemic resulted in shelter-in-place orders and travel restrictions.
And on Wednesday, the International Air Transport Association (IATA) said daily flights increased by 30% between April 21 and May 27. The IATA said the improvement in the data suggests “the industry has seen the bottom of the crisis, provided there is no recurrence.”
The Jets ETF shot up 11.6% to a three-month high, and has now gained 27.0% amid a four-day win streak. In comparison, the Dow Jones Transportation Average DJT, +1.42% , which includes six airline components, has climbed 6.8% this week and the Dow Jones Industrial Average DJIA, +0.04% has tacked on 3.5%.
Among the ETF’s other more-active components on Thursday, shares of United Airlines Holdings Inc. UAL, +16.19% shot up 16.2%, Delta Air Lines Inc. DAL, +13.73% powered up 13.7%, JetBlue Airways Corp. JBLU, +15.52% climbed 15.5% and Southwest Airlines Co. LUV, +5.08% advanced 5.1%.
“Unless we get another wave of coronavirus, we think it is safe to say that April’s virtual lockdown of global aviation activity was the trough for RPMs,” wrote analyst Robert Stallard of Vertical Research Partners, in a note to clients.
RPM refers to revenue passenger miles, or traffic. Capacity, or available seat miles (ASMs), divided by RPMs equals load factor.