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In the first three months of this year, American Airlines expects to fly around 8% to 10% fewer passengers than in the same time last year. Credit… Reuters/Mike Blake
The Omicron version of the coronavirus slowed the industry’s recovery in the last three months of last year, costing American Airlines $931 million.
Airlines are now focusing on returning to profitability in 2022, after a year of recovery interrupted by setbacks. Spring and summer are expected to be strong, thanks to a comeback in business and international travel, according to industry leaders.
“Over the last year, we’ve seen times of strong travel demand followed by periods of lower demand as a result of new Covid-19 variations,” stated American Airlines CEO Doug Parker in a statement. “This instability has produced the most difficult planning environment in commercial aviation history.”
Over the holidays, Omicron led airline employees to call in ill at an all-time high, exacerbating issues caused by winter storms and leading to tens of thousands of cancellations during one of the busiest travel times of the year. However, American outperformed its contemporaries at that time period.
Over the two weeks beginning December 25, American canceled slightly under 1,500 flights, compared to more than 4,300 for Southwest Airlines, 2,500 for United Airlines, and 2,000 for Delta Air Lines. The cancellations accounted for 4% of American’s flight schedule, compared to 9% for Southwest, 8% for United, and 5% for Delta.
In January and February, Omicron will continue to weigh on demand, according to American. In the first three months of this year, the airline estimates capacity to be roughly 8% to 10% lower than in the same time last year, as measured by tickets sold and distance flown. Over the same time span, revenue is predicted to drop by 20 to 22 percent.
American is more upbeat about the remainder of the year, forecasting just a 5% decrease in capacity in 2022 compared to 2019. This year, the airline also wants to return to profitability.
Domestic and short-distance foreign travel had virtually entirely returned to pre-pandemic levels, according to the business, while corporate travel inside the United States had been restored to around 70% of pre-pandemic levels. Long-distance international travel is still behind, although this is projected to improve as Omicron infections fall and vaccinations are provided internationally.
According to American Airlines, capacity was down around 13% in the last three months of 2018 compared to the same time in 2019, with revenue down nearly 17%. The corporation lost roughly $2 billion in 2021, a decrease from the over $9 billion loss in 2020, which was partially offset by billions of dollars in public help to pay staff. Last year, the airline had around $15.8 billion in cash on hand.
During the epidemic, the airline streamlined its fleet, replacing older, more costly aircraft with newer, more efficient jets. As a consequence, capital investment in the United States in 2022 and 2023 is likely to be around half of what it was in the years preceding up to the epidemic, according to the report.
The virus isn’t the only recent danger that airlines have faced. After recovering from last week’s Christmas snafu, the airline industry is bracing for another significant interruption this week: the rollout of 5G cellular service, which airlines have warned might interfere with flight safety gear. At the request of the aviation sector, cellular providers decided not to install 5G near specific airports, averting the crisis.
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