Airline stock rally, American cites intention to pay off loan

FORT WORTH, TEXAS (AP) – Airlines inventories rose on Monday, boosted by signs that vaccine deployments could trigger a rebound in travel later this year.

American Airlines, meanwhile, announced plans to raise $ 7.5 billion by borrowing against its frequent flyer program and using the funds to pay off a federal loan it received almost a year ago, at the start of the pandemic.

The airline said the shares would not increase its overall debt. It follows similar initiatives by Delta Air Lines and United Airlines.

Fitch Ratings said American liquidity improved more than expected due to federal loans and money to help cover wages – aid that was extended in December and would get another renewal of the COVID-19 relief measure passed by the Senate this weekend.

“Meanwhile, the rollout of several effective coronavirus vaccines has increased the likelihood of a significant rebound in air travel from 2021, reducing the likelihood that the American will continue spending money for an extended period of time. “Said Fitch. American spent about $ 30 million in cash per day in the fourth quarter. Fitch warned, however, that air traffic remained weak and the pace of the recovery was uncertain.

Airlines have been particularly hard hit by the pandemic, and travel restrictions continue to wipe out most international flights, normally a lucrative part of their business.

There have been signs of improvement in domestic travel. After a dismal January, passenger numbers have since followed an upward trend.

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