U.S. airlines gauge positive outlook on surge in leisure travel demand
The positive effects of the widespread distribution of the COVID-19 vaccine are beginning to take shape, particularly in the United States. Vaccine roll-out in the US began in mid-December 2020, with the FDA approved Pfizer/BioNTech vaccines offering up to 95% protection.
US airlines appear optimistic about the travel outlook, as they re-engage their pilot and aircraft crew pools in preparation for a surge in leisure travel demand and rebound from a combined $35 billion loss in 2020.
United Airlines is the first among the largest US airlines to announce pilot hiring again. In a staff note sent to 12,000 plus pilots, United Airlines revealed their hiring resumption by stating: “We’ll start with the approximately 300 pilots who either had a new hire class date that was cancelled or who had a 2020 conditional job offer.”
This signals a turning point from pilot layoffs seen in 2020, which were eventually halted through a deal negotiated by pilot unions in late September 2020 that avoided nearly 3000 pilot furloughs.
While business demand is still hovering down by 80%, United is optimistic that with the continued vaccination roll-out to the population, coupled with the uptick in leisure demand should see business travel pick up in Q4 2021.
“We still have a way to go before we get through to the light at the end of the tunnel, but it’s nice that at United Airlines we can see that light at the end of the tunnel,” commented United Airlines CEO Scott Kirby at the 20th anniversary of the US Chamber of Commerce Aviation Summit on March 31, 2021. “Domestic leisure demand has almost entirely recovered, and it tells you something about the desire for travel and the desire to remake those human connections with people.”
The positive sentiment towards the rebound in travel demand has taken root in other US-based carriers, who have also presented their outlooks on a return to positive cash flow, including LCCs voicing their intents to re-engage pilots and aircraft crews.
Over the course of February and March 2021, a wave of budget airlines including JetBlue (JBLU), Spirit Airlines (S64) (SAVE), Sun Country Airlines, and Allegiant Air, all announced their intent to resume hiring pilots, flight attendants, and instructors to address the increase in leisure travel demand.
American Airlines (A1G) (AAL) revealed in a United States Securities and Exchange Commission report that “As of March 26, the Company’s seven-day moving average of its net bookings is approximately 90% of the level experienced in 2019, with a domestic load factor of approximately 80% during that same period.” The carrier expects this booking momentum to build through to the end of the first quarter and spill over into the second quarter.
“From our perspective and the industry’s perspective, March for us and for other airlines will be the first positive cash flow in 12 months,” said Ben Minicucci, the President and CEO of Alaska Air Group. “There’s a lot of reason to be optimistic. When we look at passengers carried and advanced bookings, they are stronger than they have been in recent months.”
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