Suddenly announced： grounded!

Christmas in the United States was suddenly a thrilling scene.

On the busiest travel day before Christmas, American Airlines suddenly grounded all flights. On December 24th, local time, the Federal Aviation Administration (FAA) suddenly announced that American Airlines had grounded all flights nationwide.

Subsequently, American Airlines quickly issued a statement, pointing out that all its flights were facing technical difficulties, and promised to go all out to resume flight operations in the shortest time. Affected by this, American Airlines once fell more than 5% before the market.

At around 21: 00 Beijing time, the Federal Aviation Administration said that the grounding measures for American airlines had been cancelled. American Airlines said that the short grounding was attributed to the failure of the technology supplier, and the grounding measures lasted for about an hour. After the opening of the US stock market, the share price of American Airlines fell, once falling more than 2% in intraday trading.

Suddenly grounded

On December 24th, local time, the Federal Aviation Administration (FAA) announced in a statement that American Airlines had grounded all flights nationwide. But no reason was given.

Subsequently, American Airlines posted on social platform X that all its flights were experiencing technical problems, which led to the interruption of operations on one of the busiest travel days of the year.

The post also added: "Your safety is our top priority. Once the problem is solved, we will let you reach your destination safely." In response to questions from other social media users, the airline said it could not estimate how long the repair would take.

American Airlines said that the specific repair schedule has not yet been determined, but the team is making every effort to solve the current technical problems as soon as possible.

In a statement to ABC, American Airlines added: "We are making every effort to solve this problem quickly and sincerely apologize for the inconvenience caused to passengers."

American Airlines operates thousands of flights every day to more than 350 destinations in more than 60 countries.

Some online posts reflect that the airline cannot accurately calculate the weight and balance demand of flights due to software failure. The airline said in another post that it is working hard to repair it, but it is not sure how long it will take.

Affected by this, American Airlines once fell more than 5% before the market.

At around 21: 00 Beijing time, the Federal Aviation Administration announced that it had cancelled the grounding order for American airlines. American Airlines said that the short grounding was attributed to the failure of the technology supplier, and the grounding measures lasted for about an hour.

After the opening of the US stock market, the share price of American Airlines fell, once falling more than 2% in intraday trading.

According to the data of the US Transportation Security Administration, nearly 40 million passengers are expected to be inspected from December 19th to January 2nd, 2025, which is 6.2% higher than the same period in 2023, reflecting the continuous recovery of air travel demand in the United States.

According to Reuters, a few months ago, American Airlines was grounded due to global technical failures related to Microsoft’s Azure cloud platform and software problems of network security company CrowdStrike. Two years ago, Southwest Airlines crashed during the holidays, resulting in the cancellation of 16,900 flights and 2 million passengers stranded. The company was finally fined $140 million, which is the highest civil fine ever imposed due to the interruption of travel.

The recovery of American aviation industry

Recently, the share price of American Airlines has continued to strengthen, stimulated by the recovery of the aviation industry. According to the latest data, since August this year, the share price of American Airlines has risen by more than 90%, which shows the market’s confidence in its performance and industry recovery.

In the news, Wall Street analysts are generally optimistic about airline stocks, which is attributed to the economic recovery, the sharp increase in demand, the increase in fares and the improvement in cost management.

According to the data released by the Transportation Security Administration (TSA), on December 1, local time, the passenger flow at American airports reached 3,087,392, a record high.

At the same time, American Airlines recently raised its profit forecast for the last few months of this year, and it is expected that its performance will be even stronger in the key holiday travel season.

American Airlines said in a regulatory document that it expects adjusted earnings per share to reach 55 cents to 75 cents in the fourth quarter, compared with 50 cents at most. The revised range easily exceeded analysts’ average expectation of 40 cents.

In addition, due to the strong demand for travel at the end of the year, JetBlue also updated its guidelines for the fourth quarter. The airline expects that the revenue in the fourth quarter will drop by 2% to 5%, compared with the previous forecast of 3% to 7%; The number of available seat miles is expected to drop by 4.5% to 6.5%, compared with the previous forecast of 4% to 7%.

According to Morgan Stanley’s research, the demand for business travel is expected to return to 85% before the epidemic in 2024. Business travelers are usually willing to pay higher fares, which makes a significant contribution to airline profits. In addition, the increasing demand for luxury and long-distance travel has further enhanced the attractiveness of airlines’ high-end products.

Recently, several airlines have received "buy" ratings from Wall Street analysts. Among them, Goldman Sachs raised the target price of American Airlines by 15% on the grounds of revenue growth and improved financial situation. Morgan Stanley believes that the aviation industry is in the initial stage of structural recovery, and it is expected to usher in stable growth in the next few years, raising the target share price of American Airlines Group from $18 to $22, and maintaining the "overweight" rating.

In addition, airlines also give back to shareholders by buying back shares and paying dividends. For example, Delta Air Lines plans to buy back $2 billion worth of shares in the next two years, which shows its confidence in future cash flow.

In addition to the recovery of traditional markets, the growth potential of aviation demand in emerging markets is equally huge. According to IATA’s forecast, by 2035, the number of air passengers in the Asia-Pacific region will reach 3.5 billion, accounting for nearly 50% of the global total. Among them, China and Indian aviation markets are becoming the main sources of growth for international airlines.

Proofreading: Liu Xingying