A United Airlines Boeing 737 Max 9 aircraft lands at San Francisco International Airport in Burlingame, California on March 13, 2019.
Justin Sullivan | Getty Images
American airlines are laying the foundation for a travel recovery months, if not years, away.
Some airlines buy new aircraft while others train pilots and even hire new staff. Decisions they make now will affect how they will be positioned to benefit from a possible air travel recovery.
However, U.S. airlines are still struggling and losing $ 150 million a day, said Nick Calio, CEO of Airlines for America, an industry group that represents United Airlines, American Airlines, Delta Air Lines, Southwest Airlines, and other major airlines. US airlines combined lost more than $ 35 billion last year, and the number of passengers has dropped by more than 60% from 2019 to about 370 million, the lowest number since 1984, according to the US Department of Transportation.
“We are confident that we will break even by the end of the year,” Calio said Tuesday before the House’s aviation subcommittee at a hearing on the industry’s prospects for recovery.
Capacity has halved compared to the previous year, while passenger traffic has still decreased by more than 60%, according to the industry group.
But with vaccinations rising and new Covid-19 infections well above their highs from early January, airlines are beginning to see a recovery. Parliament last week passed a $ 1.9 trillion aid package to Covid-19 that included a third round of state payroll assistance to airlines.
Signs of thawing
Discount airlines like Spirit Airlines and Allegiant Travel Co. are the most optimistic. Spirit plans to train new pilots and flight attendants this month for the first time since the pandemic began.
Even before the pandemic, their business models focused on price-sensitive domestic vacation travel, which has outperformed international travel and business travel over the past year. These two, sometimes overlapping, segments were a pillar of large network airlines before Covid-19 spread around the world, triggering entry bans, quarantine assignments and breaks on business trips.
But even major airlines, which have been forced to redefine their businesses in the pandemic, see some bright spots.
“Demand for Spring Break has been more robust than expected,” said Ankit Gupta, United’s vice president of network and scheduling, in an interview. “The booking patterns in summer look good.”
Network planners like Gupta have played an even more important role for airlines over the past year as they need to keep airline costs down while increasing service as demand increases. To make matters worse, travelers are booking closer to their travel dates due to the great uncertainty surrounding the pandemic.
United said Monday it is increasing its order for Boeing 737 Max aircraft. The company didn’t reveal how much it paid, but aviation consultancy Ascend by Cirium said Max 9 aircraft are valued at $ 45.5 million, down about 8% from early 2019.
Andrew Nocella, United’s chief commercial officer, told employees that the purchase “helps meet the demand we expect in 2022 and 2023 and puts us on the path to providing more opportunities for our employees in the future.”
Delta President Glen Hauenstein reiterated Gupta’s optimistic mood on Monday, telling a Raymond James conference that two weeks ago the airline had seen a significant increase in travel demand for travel in the near future and for this summer.
Delta said on Friday it wants all 1,700 pilots who haven’t returned to active status by October. In January, the Atlanta-based airline targeted a return of just 400 of them.
The turnaround won’t happen immediately as travel restrictions on long-haul travel are expected to last until more people are vaccinated. Airlines for America estimates that it will take until 2023 or 2024 to return to 2019 passenger numbers.
Delta senior vice president of flight operations, John Laughter, told pilots in a note on Friday that the airline is “preparing to return to 2019 flight levels by the summer of 2023”. He noted that “customers will guide our recovery”.