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US airlines warn of drag from latest Covid-19 wave

·1-min read
Leading US carriers cut their third-quarter forecasts, citing the drag from the latest Covid-19 wave (AFP/JOE RAEDLE)

Several leading US airlines on Thursday cut their forecasts for the third quarter, citing lower bookings and increased cancelations due to the latest wave of Covid-19 infections.

After a better than expected July, American Airlines "experienced softness in August" in bookings and an increase in cancellations, attributed "to the rise in Covid-19 cases associated with the delta variant," the company said in a securities filing.

American now expects third-quarter revenues to be 24 to 28 percent lower than the comparable period of 2019, worse than the July estimater for a drop of about 20 percent.

United Airlines also lowered projections, saying 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."

Despite the drag from the recent rise in infections, "the current spike in cases has been significantly less impactful to date than prior spikes and is expected to be temporary in nature," United said in a securities filing.

"Based on demand patterns following prior waves of Covid-19, the Company expects bookings to begin to recover once cases peak."

After suffering through a devastating 2020 due to Covid-19, US airlines have partially recovered thanks to the progress on vaccinations and an uptick in domestic travel.

However, business travel and international travel remain well below their pre-pandemic levels and are not expected to fully recover before 2022 or later.

Delta Air Lines, Southwest Airlines and JetBlue Airlines also lowered some forecasts in securities filings, citing similar dynamics.

Executives from leading carriers are scheduled to present at an investor conference later Thursday.

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