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On 9 September, major U.S. airlines lowered profit expectations for the rest of this year, due to reductions in bookings because of COVID’s rampant Delta variant, The Wall Street Journal reported.
Airlines had made optimistic earnings and profit forecasts in summer as reservations for summer and fall travel grew, as we reported in “U.S. Airline Industry Takes Off” (27 Apr 2021); now bookings are fading and cancellations are up, the carriers said.
As recently as late July, airlines were forecasting profits this quarter as consumers’ pent-up demand for travel prompted airlines to add routes to vacation destinations.
Carriers also strengthened service to some business centers, such as New York and Chicago, as corporate bookings picked up.
Airlines had counted on business travelers to hit the road again after Labor Day but those bookings have failed to materialize in the numbers expected, they said.
As a result, United and Southwest airlines have abandoned their previous hopes for a profit this quarter and now expect losses, although Delta still expects a small profit for the period, it said.
United is paring back routes and schedules to meet demand and expects “challenging” slow periods between Thanksgiving and the Christmas season, CEO Andrew Nocella said.
International travel also has suffered.
During the summer, U.S. tourists began returning to Europe.
However, earlier this month, the European Union suggested its member nations ban non-essential American visitors due to the rising number of COVID cases in the U.S.
France already has banned unvaccinated U.S. travelers; other countries have imposed virus testing requirements.
Similarly, the U.S. has not removed travel restrictions on European visitors imposed in spring 2020, nor has it indicated when the strictures will be lifted.
TREND FORECAST: As we wrote in “Airlines Still Living on Federal Aid” (9 Mar 2021), under the best conditions, the airline industry itself does not expect to recover its 2019 performance levels until 2023 at the earliest.
However, as we have noted several times previously, with more people working from home and meetings online becoming the new ABnormal, business travel, which accounts for 75 percent of airline profits, will never return to its previous volume, shrinking not only airlines, but also the number of hotels, restaurants, shops, and attractions that business travelers used to patronize.