American Airlines and Southwest Airlines today reported that leisure travel bookings are bouncing back, and both revealed that they’ll be bulking out flight schedules ahead of the summer season. Over the past week, the competitor airlines have also reported improved air travel demand as more Americans get vaccinated against COVID-19 and more major tourist attractions reopen, CNBC reported.
Spring break travel, which began at the end of February and runs through April, has also been a factor in terms of recovering passenger numbers. All of which represents a welcome shift for the U.S. airline industry that lost over $35 billion in 2020 due to the pandemic.
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Southwest CEO Gary Kelly said in an interview with CNBC’s ‘Squawk on the Street’, “Thank goodness people are getting vaccinated, and thank goodness people are ready to get back to their lives and move about the country.”
Bolstered by over $1 billion in federal payroll aid, Southwest reported a $116 million profit in 2021’s first quarter and said that it expects its core cash flow will break even “or better” by June of this year. The carrier predicts its core cash burn to fall between $2 million and $4 million daily in the second quarter, as compared to the $13 million felt from January through March.
Better demand is also helping American to lessen its cash burn, which was $27 million daily in 2021’s first quarter but had fallen to $4 million by March. At this stage, American is planning to ramp up its late spring and summer operations in comparison with its 2019 capacities more than its big network competitors Delta and United.
American reportedly lost a total of $1.25 billion in this year’s first quarter, marking its fifth consecutive quarterly loss, although that figure is shrinking as consumer bookings increase. As is also the case with its major rivals, the Texas-based carrier has lost out on revenues from the bulk of business and international travel over the past year as the pandemic dragged on.
Southwest also disclosed that it plans on restoring most of its flying capacity, to around 85 percent of pre-pandemic levels, in the second quarter. American Airlines said that it expects to expand its second-quarter capacity back out to about 75 to 80 percent of what it was during the same period in 2019.
American Airlines CEO Doug Parker announced that demand for business travel is beginning to show some improvement, but is still a far cry from what it was prior to the pandemic. He and President Robert Isom wrote in a memo to employees: “The pandemic is far from over. We have to continue to fight like never before and ensure that, when the green flag drops, American is out in front. But, as our world makes daily strides in COVID-19 vaccination efforts, customers are returning to travel and there is no doubt the pace of the recovery is accelerating.”
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