American Airlines Shares Keep Flying Higher Amid Signs of Recovery

Shares of American Airlines gain additional altitude on Monday amid signs of recovery for the beleaguered airline as additional staff-severance details emerge.
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Shares of American Airlines  (AAL) - Get Report gained additional altitude on Monday amid signs of a tentative recovery for the beleaguered carrier, which late last week announced that it was powering back up its domestic and international schedules. 

American shares climbed last week after the carrier said it would increase July flights as travel restrictions imposed by the coronavirus pandemic begin to ease. The airline said it plans to fly 55% of its domestic schedule and 20% of international flights in July. In May, American flew just 20% of its domestic schedule and is flying 25% in June.

At the same time, reports on Monday indicated that the carrier was taking steps to cut costs by offering upper-level employees severance packages when terms of federal aid expire in the fall.

The severance packages for upper management include around nine months of pay and a little more than two years of healthcare coverage for at least some of the employees at the director level and above, according to reports.

The move comes as American grapples with massive costs related to the pandemic and a new reality of significantly diminished capacity that will prevent the airline from recovering those losses, not only due to a drop-off in travel demand but also from both required and self-imposed restrictions that limit the number of people on each airplane.

It also comes ahead of the Sept. 30 deadline of $25 billion in federal coronavirus payroll relief that U.S. airlines accepted in lieu of laying off or cutting pay rates of employees. The virus and measures to stop it have pushed airlines including Delta  (DAL) - Get Report, United  (UAL) - Get Report and American to their first quarterly losses in years.

Late last month, American said it planned to cut its management and support staff by about 30% to slash costs. The deadline to volunteer for the buyouts and early retirements is Wednesday.

Shares of American were up a coincidental 7.37% at $19.96 in trading on Monday.