American Airlines Group and Southwest Airlines have posted their biggest-ever annual losses.
Today, they indicated a need for additional government aid as the industry continues to reel from the coronavirus pandemic.
U.S. airlines expect demand to improve this year as vaccines become more widely distributed but have warned that the strength of any rebound will depend on the pace of vaccine rollouts and the easing of travel restrictions.
JetBlue Airways, which also posted a quarterly loss, said a recovery will be directly linked to a decline in COVID-19 case counts.
Still, the shares of those three airlines surged in early trading, boosted by a retail trading frenzy that pushed stock of American - which is the most heavily shorted airline stock - up as much as 32% after the carrier was mentioned on Reddit's WallStreetBets forum.
American posted an $8.9 billion annual loss, its biggest on record, though its adjusted quarterly net loss of $3.86 per share was better than analysts’ expectations for a loss of $4.11 per share, according to Refinitiv data.
Total operating revenue fell to $4.03 billion from $11.31 billion but topped analysts’ expectations of $3.88 billion.
Southwest reported an annual loss of $3.1 billion, its first annual loss since 1972, and said it was facing stalled demand in January and February, driven by high levels of Covid-19 cases and hospitalizations.
So far the U.S. vaccine rollout has been patchy and a string of European countries is discouraging travel and implementing more travel curbs in an attempt to contain the spread of new infections.
The United States on Tuesday began requiring negative Covid-19 tests for people entering the country from abroad, including U.S. citizens, a move that airlines said triggered a decline in bookings, even as they continue to view testing as a necessary strategy to reopen travel over the longer term.
The U.S. government has discussed mandatory Covid-19 testing for travelers on domestic flights, but American Airlines Chief Executive Doug Parker said such testing would be difficult.
