What’s Going On Here?Airline stocks jumped on Monday after the US announced it’d be letting vaccinated travelers back into the country from November. What Does This Mean?The US government first brought in strict travel restrictions to limit the spread of you-know-what in March last year, but it’s finally ready to open up again now vaccine programs have rolled out across the world. And long-grounded vacationers aren’t the only ones counting down to the rule change: airlines used to sell more first-class and business class seats on flights between the US and Europe than they did elsewhere, making these some of the most profitable trips they offer. Why Should I Care?For markets: European carriers are the real winners. American airlines might be looking forward to getting back to long-haul flights, but at least they’ve had domestic business to fall back on this past year. European carriers, on the other hand, have had to navigate all sorts of tricky restrictions, so the return of routes into the US is big news for them. That might be why British Airways-parent IAG’s shares surged more than 11% after Monday’s announcement, while American Airlines’ stock only climbed by 3%.
The bigger picture: Lufthansa needs cash fast.
This is a weight off for airlines, sure, but they still have a lot of baggage to deal with from last year. Just look at Lufthansa, which only managed to survive the pandemic thanks to a bailout from the German government. The German carrier wants to pay the money back by the end of the year, but since in-flight peanuts aren’t quite footing the bill, it announced over the weekend that it’d try selling $2.5 billion worth of shares instead. | 