Why Airline Shares Are Falling Today
Airline shares were under pressure again on Wednesday following comments from Federal Reserve Chairman Jerome Powell forecasting a long post-COVID-19 recovery that could "leave behind lasting damage" to the economy. The airlines need a quick economic rebound to avoid financial distress, and Powell's comments provided new reason for investors to worry about the viability of airline shares.
As of 12:30 p.m. EDT, shares of Spirit Airlines (NYSE: SAVE) were down 14%, shares of United Airlines Holdings (NASDAQ: UAL) were off 9.8%, and shares of Delta Air Lines (NYSE: DAL), American Airlines Group (NASDAQ: AAL), and Southwest Airlines (NYSE: LUV) were all down more than 5% apiece.
The airlines are in crisis mode, slashing flights, grounding planes, and cutting costs in hopes of weathering a pandemic-induced travel slump that has seen travel demand down 90% or more year over year. The companies have raised billions in fresh liquidity thanks to a U.S. government bailout package as well as debt and equity sales, but no amount of cash will be enough if revenue does not rebound eventually.
Source Fool.com
