US airlines may struggle to meet already trimmed 2021 financial targets due to the persistence of Covid-19, which continues eroding demand for autumn and winter travel despite a strong summer period.
That is according to a 17 September Bloomberg Intelligence research report that notes many US airlines are again trimming capacity – but not fast enough to match declining demand.
“Increasing Covid-19 infections may temper profit for US airlines through year-end, while new variants could rein in demand that has been improving in Europe and China,” the report says. “[Fourth-quarter] results are further at
risk as the pandemic squeezes business travel and the traditionally hectic Thanksgiving week.”
Bloomberg says US airlines’ capacity stands to be down 11% or more though year-end, compared to 2019 levels. But demand for seats has sunk further, resulting in load factors around 60%.
“Lower load factors are outpacing capacity cuts at US carriers, hurting fares and revenue,” Bloomberg says. “Full-service airlines may cut capacity the most in [the fourth quarter]… as large companies delay the return to office and unnecessary business trips.”
Data shows that US airlines have recently cut more seats from their fourth-quarter schedules. Regional flights – meaning those operated by partner carriers to US majors – will likely suffer the greatest cuts because mainline carriers have been favouring larger aircraft, Bloomberg says.
It adds that recovery of international air travel “may be on pause until 2022” due to ongoing travel restrictions in Europe, China and the USA.
Several US airlines in recent weeks revised third-quarter financial targets, saying the Covid-19 “Delta” variant had deflated demand and delayed recovery of the important business-travel segment.
