United Airlines Boeing 737 Max 9 aircraft lands on March 13, 2019 at San Francisco International Airport in Burlingame, California.
Justin Sullivan | Getty Images
US airlines are laying the groundwork for a rebound that will still see months, if not years, go away.
Some carriers buy new aircraft, while other pilots train and even add staff. Decisions they make now will affect how they will be positioned to capitalize on the eventual recovery of air travel.
To be sure, American airlines are still struggling and losing $ 150 million a day, says Nick Calio, CEO of Airlines for America, an industry group representing United Airlines, American Airlines, Delta Air Lines, Southwest Airlines and other major airline representatives. US airlines lost a total of more than $ 35 billion last year, and the number of passengers fell by more than 60% from 2019 to about 370 million, according to the US Department of Transportation, the least since 1984.
“We are hopeful that we will be level by the end of the year,” Calio said Tuesday in a testimony before the House Aviation Subcommittee during a hearing on the industry’s recovery prospects.
The industry group says that capacity has decreased by half compared to last year, while passenger traffic continues to decrease by more than 60%.
But with the increase in vaccinations and the new Covid-19 infections hitting high in early January, airlines are starting to recover a bit. The House last week adopted a $ 1.9 billion coronavirus relief package that included a third-round federal payment aid for airlines, $ 14 billion that will help ease the blow of a turbulent first half of the year if it go through the Senate.
Signs of a thaw
Discount companies such as Spirit Airlines and Allegiant Travel Co. was the most optimistic. Spirit plans to train new pilots and flight attendants this month for the first time since early in the pandemic.
Their business models focused on price-sensitive domestic leisure travel even before the pandemic, which outperformed international and business travel over the past year. These two, sometimes overlapping segments, were a mainstay of major network services before Covid-19 spread around the world, causing access bans, quarantine orders and business interruptions.
But even large airlines that were forced to propose their businesses in the pandemic see a bright spot.
“Demand for the spring break was stronger than we expected,” Ankit Gupta, United’s vice president of network and schedule planning, said in an interview. “The summer discussion patterns are looking up.”
Network planners like Gupta have played a more important role for airlines over the past year, as they have to balance to keep the cost of the airline low while pushing the service where the issues arise. To make the job more difficult is for travelers to book closer to their travel dates due to so much uncertainty in the pandemic.
Spring training
United said on Monday that it was increasing its order for Boeing 737 Max aircraft. The company did not disclose how much it paid, but aviation advisory firm Ascend at Cirium said Max 9 aircraft are valued at $ 45.5 million each, about 8% compared to early 2019.
Andrew Nocella, chief trading officer of United, told staff that the purchase helps us meet the demand we will expect in 2022 and 2023, and it will provide us with more opportunities for our employees in the future.
Delta president Glen Hauenstein yesterday echoed Gupta’s optimistic sentiment, saying at a Raymond James conference that the airline had seen a significant increase in short-term and summer travel demand since two weeks ago. .
Delta said Friday it wants all of the approximately 1,700 pilots who are not active again by October. In January, the airline carrier in Atlanta expects a return of only 400 of them.
The turnaround will not happen immediately, and the travel restrictions on long-distance travel are expected to linger until more people are vaccinated. Airline for America estimates that it will take until 2023 or 2024 to return to the passenger volumes of 2019.
John Laughter, Delta’s senior vice president of aviation operations, said in a note to pilots on Friday that the carrier was “preparing to rebuild to 2019 levels by the summer of 2023.” He noted that “customers will determine the path to our recovery.”