US Airline Operators See Impact of Delta Variant
Rising Case Numbers Slows Airline Industry Recovery
Recovery for the airline industry appears to be slowing, at least for now, as rising COVID-19 cases dampen consumers’ interest in flying. American Airlines (AAL), Delta Air (DAL), United Airlines (UAL), Southwest Airlines (LUV), and JetBlue (JBLU) all reported a slowdown in bookings and an increase in cancellations during August.
Most analysts did not expect this trend for airlines. Of the industries hit hard by the pandemic, airlines were poised to have a quick recovery due to pent-up demand for travel. Earlier this summer, airlines could barely handle the demand from vaccinated travelers ready to vacation again. However, rising cases of COVID-19 have caused many consumers to rethink their travel plans.
Airlines Reduce Capacity
United Airlines is among the airline operators reducing capacity for the rest of 2021 to match current demand. United also scaled back its profit forecasts for the third quarter and warned that it will likely lose money in the last quarter of the year if demand stays at its current level.
Meanwhile, Southwest Airlines is seeing losses in its current quarter as a result of cancellations and lower bookings. Sales in August were at the low end of its target, while weaker bookings from travelers have continued for September and October. The airline also expects flying capacity in the fourth quarter to be 5% lower than it was two years ago.
Looking Ahead
Though it has been an unexpectedly difficult period for airlines, they do not expect the downturn to be permanent. United said in a recent filing that the current increase in COVID-19 cases has had less of an impact than previous increases and will likely be temporary. Once cases peak, United expects bookings to increase again. Meanwhile, Delta Airlines said it saw bookings stabilize in the past two weeks. It expects that in about 90 days, travel will pick up again.
After more than a year and a half of the pandemic, airlines have practice dealing with fluctuating demand. While the Delta variant is slowing down the industry’s recovery, airline operators are optimistic that this will be temporary.
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