The Treasurer of North Carolina has recently bought thousands of stocks in American Airlines. The recent acquisition comes following the significant expansion of the airline's operations in the state. The state believes that the investment is a wise decision as it anticipates a strong return from the investment and hopes it will indirectly fuel the growth of its economy and transportation services.

State investment

The state has owned shares in the airline for years but has recently made a sizable investment to increase its holding. According to Market Beat, the state increased its shares by 4.5% in the third quarter of 2022, acquiring 12,360 additional shares bringing the total number to 285,585. All in, the state treasury's holdings in the airline total $3.438 million.

Photo: Vincenzo Pace | Simple Flying

Calculated decision

It is not uncommon for a state or other governing body in the US to allocate some of its budgets to the stock market. Government bodies do this to diversify investments in hopes that it will better secure the state's funds and potentially receive a healthy return, generating additional capital.

Photo: Tom Boon | Simple Flying

Like most US airlines, American Airlines has seen strong growth in its operations over the past year as the air transit industry moves through its post-pandemic recovery. Over the course of 2022, demand for air travel has increased dramatically, allowing the airlines to regain profitable status rapidly.

The state of North Carolina, along with several other high-profile investors, has purchased many of the airline's stocks in anticipation that this growth will continue throughout the next few years as the industry is on track to exceed 2019 performance levels. Many investors have seen American and other airlines as intelligent investments as they return to profitability while the stock market continues to perform poorly. While many will choose their investments based on market trends and other calculations, some occasionally invest for different reasons. North Carolina is one of these exceptions.

Photo: CLT Airport

While the state has invested partly because it sees it as a wise choice from a financial standpoint, it also sees it as a way to invest in itself indirectly. American Airlines has been one of the largest air transit operators in the state for decades. This history has cemented the airline within the state as a large part of its transportation network and economy. Because of this, the state can be confident that the investments will indirectly improve its economic outlook, while also realizing that improvements in airports and air services will benefit the airline, hopefully leading to a larger return on the investment.

Upcoming expansion

The airline has been expanding operations in North Carolina over the past year. Most notably, the airline recently announced the expansion of international operations between Charlotte Douglas International Airport (CLT) and the UK's London Heathrow Airport (LHR). The expansion will add a third daily service between the two cities starting April 15th.

The service will offer 273 additional daily seats as it will be flown aboard a Boeing 777-200. While this operational expansion will only marginally increase operations in the state, it shows that the airline is continuously looking to expand operations there and will likely add more domestic flights to support international arrivals.

Find flights from Charlotte to London here.

What do you think of this recent investment? Let us know in the comments below.

Source: Market Beat