Airline sector-related exchange traded fund is gaining altitude after American Airlines Group (NasdaqGS: AAL) stated it will be aggressively increasing flights to meet the pent-up demand for travel.
Among the best performing non-leveraged ETFs of Thursday, the U.S. Global Jets ETF (JETS), the lone ETF dedicated to the airline industry, surged 11.4%.
Lifting the airline segment up, American Airlines Group shares jumped 36.2% after it said it will significantly increase U.S. flights in July, reversing the dramatic cuts in air travel due to the coronavirus pandemic as it will fly over 55% of its July 2019 domestic capacity, Reuters reports.
The airline, the largest U.S. carrier, will also raise its international flight schedule next month to nearly 20% of its July 2019 schedule. In comparison, American flew just 20% of its domestic schedule in May and is flying 25% in June, according to Vasu Raja, American Airlines’ senior vice president of network strategy.
“As an airline, we’ve consciously bet on demand coming back. We have bet the economy,” Raja told Reuters, noting American has been operating a larger schedule than U.S. rivals.
Other airlines are following suit as they add more flights to meet the returning summer demand. OAG, which tracks the airline industry and flight schedules, says the four biggest U.S. carriers, which include United, American, Delta, and Southwest, are boosting schedules in June by 27% from May, CNBC reports.
Most of that increase in flights is to meet additional domestic demand. However, for international routes, the growth in flights has been much more gradual due to the lower demand to travel abroad.
“The industry is showing some signs of recovery, but there are noticeable changes in consumer behavior,” John Grant, OAG’s senior aviation analyst, told CNBC. “People are booking later, seeking more flexibility in their travel bookings and not committing to payment until the last minute.”
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