Airlines warn of ticket slump as Delta variant hits their recovery
Several major U.S. airlines indicated Thursday that their businesses have taken a hit from a surge in COVID-19 cases driven by the Delta variant.
Why it matters: A recent decline in bookings and an increase in cancellations have triggered a much lower revenue forecast for airlines than previously anticipated. The trend, which was earlier reported by AP, threatens to stifle the industry's rapid recovery from the coronavirus pandemic, which halted air travel in its early days.
- American Airlines, Delta Airlines, United Airlines, Southwest Airlines and JetBlue all said in filings that their businesses were hurt by the Delta variant.
- The companies have indicated that the decline is more pronounced in business and international travel, both of which are critical to airline revenue.
The big picture: American indicated in a filing Thursday that it had experienced a slow-down in ticket sales in August that has continued into September.
- The airline also said it expects third-quarter revenue in 2021 to be down approximately 24% to 28% compared to the third quarter in 2019.
- In another filing, Delta noted that total revenue is expected to be at "the lower end of the prior guidance," blaming the virus with lowering demand.
What they're saying: "The variant is forcing us all to realize this is a serious disease ... that we have to deal with," Delta CEO Ed Bastian said Thursday at a conference hosted by investment bank Cowen.
- "[Companies are] just not traveling in the volumes necessary yet to get our business back to where we need it to be as they're waiting for the variant to subside," he added.
What's next: The airlines, however, indicated they were optimistic that the downturn wouldn't last long.
- Bastian said he expects the Delta variant to delay the recovery by about 90 days.
- JetBlue noted that it believes demand for holiday travel will "hold up relatively well."