Monday, May 29, 2023

American Airlines Shares Rise After WallStreetBets Shout | Aviation News

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American Airlines also reported a narrower-than-expected quarterly loss on Thursday.

American Airlines Group Inc shares jumped more than 20% when trading opened on Wall Street after the carrier was mentioned on Reddit’s WallStreetBets forum and posted a more quarterly loss on Thursday. thin than expected.

The American has joined rival Delta Air Lines in calling 2021 a year of recovery for an industry that has been ravaged by the coronavirus pandemic, but airlines continue to burn millions of dollars every day and the strength of the rebound will depend on the pace of vaccine rollout, outings and relaxation of travel restrictions.

“As we look to the year ahead, 2021 will be a year of recovery. While we don’t know exactly when passenger demand will return, as vaccine distribution takes hold and travel restrictions lifted, we’ll be ready, ”said American Airlines CEO Doug Parker.

Shares of U.S. airlines had gained ground since the vaccine breakthroughs in November, but came under further pressure earlier this week amid concerns about new coronavirus variants and tighter restrictions.

American posted a net loss of $ 2.18 billion, or $ 3.81 per share, for the fourth quarter, compared with earnings of $ 414 million, or 95 cents per share, a year earlier. The carrier reported an annual loss of $ 8.9 billion, the largest on record.

In recent days, retail investors have piled on heavily sold stocks including GameStop Corp and AMC Entertainment Holdings Inc, sparking a battle between small traders who use social media forums like WallStreetBets and large Wall Street institutions who rocked the US and European stock markets [File: Brent Lewin/Bloomberg]

Shares climbed 26% to $ 21 per share early in the session even as the heavily leveraged airline reports large losses and faces an uncertain outlook for the industry. Investors said the gains were likely fueled by short pressure. The American is the most short-circuited airline stock, according to data from S3.

“The numbers clearly weren’t something that would make the stock go up like that,” said Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey.

“Troubled balance sheets and high short positions in equities have become the immediate target of these cuts and they fit neatly into this category.”

GameStop 2.0

In recent days, retail investors have piled on heavily sold stocks including GameStop Corp and AMC Entertainment Holdings Inc, sparking a battle between small traders and large Wall Street institutions that rocked the US and European stock markets.

“GameStop 2.0! I think some of them relate to short sellers and those who are considering some of these short term opportunities to push stocks. American Airline’s earnings were okay, they’re still bleeding a lot of cash, ”said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Helane Becker, analyst at Cowen, said the company could use the stock spike as an opportunity to pay off debt with a stock offering.

Airlines hope sentiment improves this year as COVID-19 vaccines become more widely distributed. However, new strains of the virus have triggered stricter rules for international travel to countries including the United States.

On an adjusted basis, the company reported a loss of $ 3.86 per share. Analysts on average expected the company to lose $ 4.11 per share, according to data from Refinitiv.

Total operating revenue fell to $ 4.03 billion, from $ 11.31 billion, but exceeded analysts’ expectations by $ 3.88 billion.

American Airlines ended the fourth quarter with approximately $ 14.3 billion in available cash. He burned about $ 30 million a day in the fourth quarter.


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