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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.

Benzinga · 05/19/2020 18:29

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.

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