By Dhirendra Tripathi
Investing.com – American Airlines (NASDAQ:AAL) and Southwest Airlines (NYSE:LUV) were both up in Thursday’s premarket following earnings updates that indicate better times for their sector as people look to get out and travel after a year of being locked in.
American Airlines reported its net loss fell to $1.3 billion in the March quarter from $2.2 billion in October-December. This was even as revenue remained unchanged at $4 billion.
The company’s total available cash of $17.3 billion at the end of the quarter was higher than its forecast of $15 billion liquidity and it said this could hit $19.5 billion by end of June, as cash flow improves with rising passenger numbers.
Southwest’s performance was even better as the airline managed to generate net income of $116 million for the quarter through March, after a net loss of $908 million for October-December.
For Southwest, total operating revenues rose by $100 million to $2.1 billion. It said it is in the process of adding flights in June, expects June available capacity to be only slightly less than June 2019 pre-pandemic levels.
While leisure travel bounces back, Southwest did warn “business travel is expected to have a significant negative impact on close-in demand and average passenger fares”.
That didn’t deter Jefferies (NYSE:JEF) analyst Sheila Kahyaoglu from maintaining a ‘buy’ on Southwest. She has a target of $75 for the stock, representing upside potential of some 21% from its present price of $62.