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Airline recovery slows in wake of Hurricane Ida and spike in COVID-19 cases

September 9, 2021
in Finance
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Airline recovery slows in wake of Hurricane Ida and spike in COVID-19 cases
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Major U.S. airlines are still steering their way through the COVID-19 pandemic as they update their investors on traffic during the third quarter.  

Delta Air Lines’ (DAL) most recent investor update says, “During the quarter demand exceeded expectations in July. In early August, the pace of recovery paused due to the sharp rise in COVID cases” But Delta cautioned that an expected increase in business travel has slowed down, “as companies delay or scale down initial office re-openings.”

The major U.S. airlines are updating investors and presenting their findings at Cowen’s 14th Annual Global Transportation & Sustainable Mobility Conference.

Southwest Airlines (LUV) warned investors revenue in the third quarter will be down 18% to 20% because of the spike in COVID-19 cases nationwide and aftermath of Hurricane Ida. Southwest’s SEC 8-K filed this morning says, “The Company continues to experience softness in bookings and elevated trip cancellations, especially close-in, as a result of the rise in COVID-19 cases associated with the Delta variant.”

Southwest plans to cancel 2,700 flights during the quarter following the impact of Hurricane Ida. “While the duration of the negative effects to operating revenues is unknown, impacts experienced, thus far, and currently estimated through October 2021, are less severe than experienced during prior waves of rising COVID-19 cases.”

Southwest also says current bookings are “fairly typical booking patterns for holiday travel periods in fourth quarter 2021.”

‘Deceleration in customer bookings’

It’s a similar story at United Airlines (UAL) which in its SEC 8-K says it has seen, “in the last few weeks a deceleration in customer bookings for travel compared to previous estimations due to the recent spike in COVID-19 cases associated with the Delta variant.”

United predicts revenue in the third quarter will be down approximately 33% versus the third quarter of 2019. “The Company has adjusted its capacity to align with the lower demand environment and, as of the date of this report, now expects third quarter 2021 capacity to be down at least 28% versus the third quarter of 2019.” United expects a pre-tax loss in the third quarter of 2021 and says, “if current trends continue, the Company also now expects an adjusted pre-tax loss in the fourth quarter of 2021.”

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American Airlines (AAL) also cut its guidance expecting revenue in the third quarter to fall about 24% to 28%, compared to 2019. 

American is facing a revolt among its 15,000 pilots and their union, the Allied Pilots Association. APA members plan to picket American at airports including Miami International and Dallas/Fort Worth next month. 

“Management has repeatedly demonstrated its inability to run a reliable airline,” the union said in a statement sent to Yahoo Finance. “Management often resorts to making up its own rules, generating brand-damaging headlines and jeopardizing passenger loyalty and precious revenue.”

The airline issued a statement to Yahoo Finance saying, “We’ve taken steps to ensure we can support the operation and get our customers where they want to go, when they want to go.”

Adam Shapiro is co-anchor of Yahoo Finance Live 3pm to 5pm. Follow him on Twitter @Ajshaps

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn,YouTube, and reddit


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