The Late Late Show with James Corden
- Fresh hopes for a coronavirus vaccine helped boost the combined market value of the “big four” US airlines by more than $5 billion on Monday.
- The American drugmaker Moderna said participants in an early-stage vaccine trial showed promising immune responses with minimal side effects.
- American Airlines stock rose 9% on the news, with Delta Air Lines and Southwest Airlines stock rising by about 13% and United Airlines stock up 21%.
- The stock prices of all four carriers is still down more than 50% this year, however, with air travel still mostly halted.
- Visit Business Insider’s homepage for more stories.
Investors appeared to celebrate an American drugmaker’s progress toward creating a coronavirus vaccine by adding more than $5 billion to the market capitalizations of the “big four” US airlines on Monday.
The drugmaker Moderna reported on Monday that participants in an early vaccine trial showed promising immune responses with minimal side effects.
The news fueled hopes that the US economy might open sooner than expected, and American Airlines stock rose 9% on the news, with Delta Air Lines and Southwest Airlines stock up by about 13% and United Airlines stock up 21%. Their combined market caps rose by about 14% to $41 billion.
Despite those gains, Southwest’s stock is still down just over 50% this year, with American and Delta down about 63% and 66% and United down by more than 73%.
Those declines reflect the devastating impact of the coronavirus pandemic on the airline industry. Travel restrictions and transmission fears have almost eliminated demand for flights, sending passenger numbers down more than 90% and forcing carriers to cut routes and leave more than half of the passenger planes in the US sitting idle.
Southwest CEO Gary Kelly said this month that the airline burned nearly $1 billion in cash in April and warned it would have to “dramatically downsize” unless conditions improved. Boeing CEO David Calhoun said it was “most likely” that a major carrier would fail later this year.
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Warren Buffett struck a similar tone at Berkshire Hathaway’s annual meeting this month. He said the conglomerate dumped its stakes in the four carriers in April, as he wasn’t confident that passenger numbers would rebound in the coming years and feared operators would be lumped with “too many planes.”
“The world has changed for the airlines,” he said. “The future is much less clear to me.”
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