Holiday Boosts China’s Travel Sector, U.S. Airliners Begin Furloughs
The domestic tourism industry in China is booming; America's is bust. Yet both nations see airline stocks rise.
Steven Lerner
Oct 01,2020,16:40

Millions of travelers across China were on the move for today’s start of the Golden Week holiday and Mid-Autumn Festival, a sign that the country has seemed to recover from the pandemic.

Meanwhile, the travel sector in the United States is still in shambles as airlines furlough tens of thousands of employees today.

Online travel agency (Nasdaq: TCOM), which saw its stock rise 0.80% on Thursday, reports that Chinese tourists are making 600 million domestic trips during the holiday. This represents a 23% decline from the previous year.

Government research institute China Tourism Academy pegs the number of domestic trips at 550 million.

China state media expects 13 million railway passengers on Thursday, which is 4 million passengers fewer than on the same day last year.

While these travel figures are lower year-over-year, the domestic tourism industry in China has recovered immensely since the onset of the pandemic.

China Eastern Airlines (NYSE: CEA) and China Southern Airlines (NYSE: ZNH), report that passenger traffic in August eclipsed January’s numbers. Shares of China Eastern Airlines is up 0.74% on Thursday, while China Southern Airlines is up 1.07%.

It’s a different story for travel in the United States.

Thursday marked the expiration date for the federal CARES Act Payroll Support Program, which propped up U.S. airlines when ticket sales plummeted due to the pandemic.

Passenger traffic on U.S. airlines declined 73% year-over-year in July.

United Airlines (Nasdaq: UAL) and American Airlines (Nasdaq: AAL) sent furlough notices to 32,000 employees on Thursday due to the loss of federal payroll support. American Airlines CEO Doug Parker says the furloughs can be reversed if an extension of the stimulus package from Washington is passed.

Seven U.S. carriers, including JetBlue (Nasdaq: JBLU), are taking loans from the U.S. Department of Treasury. American Arlines (Nasdaq: AAL) received another loan worth up to $7.5 billion from the Treasury under the Cares Act this week. Stocks in airlines are rising today, on the massive furloughs. Bad for workers, but good for the bottom line, especially for the most cash burn crazy airliners like American. American Airlines was up 1.9%; the broader NYSE Arca Airline Index rose about 1.5% today.

On Wednesday, the CDC extended a “No Sail” order for cruise ships through October, although it could be extended until at least February. Shares of Carnival Cruises (NYSE: CCL) plummeted 2.44% Thursday.

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