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American, United See Fliers Returning To Skies In March, But Costs Weigh

Published on Feb 4 2022 12:38 PM in General Industry tagged: American Airlines / United airlines

American, United See Fliers Returning To Skies In March, But Costs Weigh

US carriers American Airlines and United Airlines have said that a recovery in passenger traffic is likely to resume in March after a blip caused by the Omicron COVID-19 variant, but warned that the latest wave of the health crisis would keep their costs elevated this year.

Details

Texas-based American said that while ticket sales are still not back to pre-Omicron levels, they are recovering "quickly" after dropping off "considerably" in early December.

Similarly, Chicago-based United said that bookings and cancellations have started to return to normal levels.

"As a result, we remain optimistic that Omicron's impact, while significant, will be focused on January and February at this point," United's chief commercial officer, Andrew Nocella, told investors on an earnings call.

Nocella also said that the impact of Omicron and each possible future variant on the carrier's revenue will likely pale in comparison with that of the Delta coronavirus variant.

Rival Delta Air Lines last month, too, predicted a swift recovery from the demand slump.

Encouraged by the improvement in bookings, United expects to report a profit in the second, third and fourth quarters of this year.

American also expects to return to profitability in March.

The company said that domestic leisure and short-haul international traffic are approaching their 2019 levels, but demand for long-haul international remained challenged.

Domestic business travel, which accounted for 30% of the company's 2019 passenger revenue, recovered in the latest quarter to about 70% of the pre-pandemic level, it said.

American, however, said that the volatility in travel demand due to new COVID-19 variants has created "the most challenging planning environment in the history of commercial aviation".

Lower Capacity, Higher Costs

Both the carriers plan to match their capacity with bookings trends.

American expects its capacity in the quarter through March would be down approximately 8% to 10% compared to the same period in 2019. Full-year capacity is projected to be 5% lower than in the pre-pandemic year.

United's 2022 capacity is now projected to be lower than in 2019, instead of growing 5% as estimated earlier.

Lower capacity as well as lower aircraft utilisation because of delayed demand are estimated to drive up costs at the both the airlines. Higher fuel prices, rising wages and increased training costs are also pinching them.

United's costs this year are now expected to be higher than in 2019, instead of going down. American estimates that its costs will be 5% higher in 2022 than in the pre-pandemic year.

Losses Per Share

United reported an adjusted loss of $1.60 per share for the quarter through December, compared with a loss of $7.00 per share a year ago.

American's adjusted loss for the quarter came in at $1.42 per share, compared with a loss of $3.86 per share a year ago.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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