U.S. Airlines Warn of Weakening Demand Ahead of Holiday Travel
(Bloomberg) -- The holiday travel rebound U.S. airlines were anticipating is starting to wobble.
Surging coronavirus cases have caused a “weakening” in bookings, American Airlines Group Inc. President Robert Isom said Thursday at a Skift conference. Earlier in the day, United Airlines Holdings Inc. followed Southwest Airlines Co. in warning that more customers are scrapping their trips.
“There has been a deceleration in system bookings and an uptick in cancellations as a result of the recent spike in Covid-19 cases,’ United said in a regulatory filing.
The slowdown threatens airlines’ push for a modest holiday sales boost at the end of a year in which air travel collapsed because of the coronavirus pandemic. Only two weeks ago, United was adding flights for the week of Thanksgiving, saying it expected its busiest week since March. Now, government leaders are discouraging travel, with the U.S. Centers for Disease Control being the latest to urge Americans to stay home.
The CDC’s guidance Thursday came a day after Anthony Fauci, the influential director of the National Institute of Allergy and Infectious Diseases, recommended that people “think twice” about traveling over the holidays. That sets up the potential for increased tension between public health officials and the nation’s battered airlines.
“We believe that renewed restrictions by many state and local governments have negatively impacted demand in the immediate term,” Alaska Air Group Inc. said in a filing.
A Standard & Poor’s index of U.S. airlines was little changed at 1:18 pm. in New York. Southwest advanced 0.6% to $45.88 for the biggest gain while United fell the most with a 1% decline to $40.64.
The U.S. reported an additional 163,975 cases on Wednesday, according to Covid Tracking Project data. There have been more than 250,000 deaths cumulatively, according to Johns Hopkins University.
“We’ve already seen a seasonal uptick in cases, and that’s concerning,” Southwest Chief Executive Officer Gary Kelly said on a conference call. “Cancellations are up, but it looks like December will be in line with what we’re seeing in November, and maybe slightly improved.”
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