Delta Air Lines, United Airlines and Southwest Airlines all said demand for air travel was strong
Airline stocks were among the best performers as the sector benefited from positive news on several fronts.
British Airways and Virgin were among those announcing that passengers are no longer required to wear masks after the UK government lifted all travel restrictions.
Travelers with IAG-owned BAs will now only have to wear a face if required by the county they are visiting, while Virgin said mandatory rules would start to be relaxed from tomorrow.
Transport Secretary Grant Shapps said the changes would come in time for Easter and meant people “can travel like the good old days”.
A series of upgrades from three US airlines also boosted investor sentiment and the idea that a recovery for the carriers could finally be underway from the ravages of the Covid pandemic.
Delta Air Lines (NYSE:DAL), United Airlines and Southwest Airlines (NYSE:LUV) all said demand for air travel was strong and helping to offset rising fuel costs.
Delta raised its adjusted revenue forecast for the first quarter to about 78% of its pre-pandemic level, from 72% to 76% previously.
Southwest said it expected revenue to decline 8% to 10% from a previous estimate of a decline of 10% to 15%, while United said lower operating revenue in Q1 would be at the “best” end of its forecast 20% and 25% decline from pre-pandemic levels.
The airline has cut its full-year capacity forecast due to rising fuel prices and aircraft delivery delays and analysts said it is now fuel costs rather than bookings that are major headaches in the airline industry.
In a note to British Airways owner IAG today, Berenberg said bookings had recovered faster than expected, but the Russian-Ukrainian war and fuel costs were threatening his forecast.
“International bookings (long and short haul) were above 80% of 2019 levels at the end of February as Omicron fears began to fade, a faster than expected rebound.”
He said the airline’s direct exposure to Russia was also limited.
“IAG’s planned capacity exposure to Russia-Ukraine was only around 0.5% in 2019A, while its Atlantic focus (48% of FY 2019A traffic, vs. 38%) on Asia-Pacific (8% of FY2019A traffic vs. peers at 23%) makes its long-haul business less vulnerable to conflict.
“If the war does not spread beyond Ukraine, fuel will remain the greatest threat to the group’s recovery.”
Even so, IAG shares rose 1.9% to 139.6p, although it was the worst performance in the UK listed sector with easyJet up 5.5% to 534p and Jet2 in 2.6% increase. Dublin-listed Ryanair rose 3.9% to 1,193p.
Even Wizz Air, based in Central Europe, made a small gain.