Airline insiders sell US$49.9M in shares in wake of record rally
Airline executives and directors sold US$49.9 million of stock in February, the most in three years, as industry shares posted a record rally fuelled by a widening vaccination effort.
The top individual sellers were at Allegiant Travel Co. and Southwest Airlines Co., two leisure-focused carriers that are among analyst picks to benefit from a rebound in vacation travel as the coronavirus pandemic eases. Executives from Delta Air Lines Inc. and Mesa Air Group Inc. also sold significant holdings, according to data from Insiderinsights.com, which analyzes such transactions.
The insider sales increased as investors bet that vaccine campaigns would gain steam and improve the prospects for a travel rebound. Airlines got hammered last year by an unprecedented drop in demand for flights. Continued stock gains are far from guaranteed this year, as the industry's recovery remains shrouded in uncertainty and the slump in lucrative corporate and international trips is expected to drag on.
The February surge in stock sales came after no airline insiders sold shares the previous month. An index of nine U.S. airlines jumped 30 per cent in February, the most on record, led by a 45-per-cent advance for Skywest Inc. Through Thursday, the stock gauge had rallied about 140 per cent since hitting a seven-year low in May 2020.
As if to underscore the uncertainty, however, the index fell 3.3 per cent at 1:14 p.m. in New York on Friday after sliding as much as 8.3 per cent for the biggest intraday drop in almost six months.
Major carriers slashed jobs and cut executive pay because of the crisis, while Congress imposed compensation limits in exchange for tens of billions of dollars in aid.
Bloomberg News surveyed insider transactions for the 11 largest publicly traded U.S. carriers. The data exclude April 2020, when Warren Buffett's Berkshire Hathaway Inc. dumped its large stakes in the four biggest U.S. airlines.
Last month, Allegiant chief executive Maury Gallagher Jr. was the industry's top seller, shedding 101,000 shares worth US$21.5 million in 13 transactions. Last year, he sold shares worth US$67.9 million. Gallagher still owns more than 13 per cent of outstanding shares in Las Vegas-based Allegiant, which he co-founded in 1997.
The company's chief operating officer and chief financial officer also sold holdings of more than US$1 million apiece. Allegiant declined to comment on executives' personal decisions to sell shares, said spokeswoman Hilarie Grey.
Southwest's insider sales made up 19 per cent of the February total for airlines. President Tom Nealon collected at US$2.98 million, while chief operating officer Mike Van de Ven got US$1.82 million and chief financial officer Tammy Romo had US$1.74 million. Restricted stock units paid to executives that vest in February carry “significant” taxes that aren't fully covered by shares withheld for that purpose, Southwest said in regard to last month's sales.
Delta president Glen Hauenstein sold US$2.63 million, while Mesa Air president Michael Lotz shed US$1.79 million. Delta declined to comment, while Mesa didn't immediately respond to a request for comment.
Executives and directors at American Airlines Group Inc. and United Airlines Holdings Inc. sold no shares, according to available data.