American and United Airlines warn of reduced demand due to Omicron

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Both American Airlines and United Airlines reported better-than-expected financial results despite problems caused by Omicron’s surge during the holiday travel period.

But both said they expect problems with the variant earlier this year.

American, the largest US airline, lost $921 million in the quarter, excluding special items. That was less than the $1.2 billion forecast by analysts and less than half of the $2.2 billion lost in the fourth quarter of 2020, before Covid-19 vaccines were widely available.

Revenue reached $9.4 billion, more than double the previous year’s $4 billion. More impressively, it was down just 17% from revenue recorded in the fourth quarter of 2019, before the pandemic started to take a toll on air travel.

But the company said revenue this quarter will drop 20% to 22% compared to the first quarter of 2019, as the rise in Ômicron affects demand for flights.

“The Omicron variant affected the timing of a full revenue recovery,” said Robert Isom, American’s president who is expected to become CEO on April 1. “Reserves are rapidly recovering after a considerable drop in early December, although not yet back to pre-Omicron levels.”

He said that leisure travel is close to 100% of its pre-pandemic level, and that much of small and medium-sized business travel is also recovering.

But large corporate travel still only accounts for 40% of pre-pandemic levels, and international travel is still falling significantly due to limitations on these flights by various governments around the world. These are among the most lucrative tickets sold by airlines.

United, on the other hand, reported a loss of $520 million, excluding special items, which was also better than the $700 million loss forecast by analysts. It was also a significant improvement from the $2.1 billion lost a year ago.

But the airline said it was pulling back on its early 2022 schedule due to softness in bookings with the rise in Covid-19 cases caused by Ômicron.

The company said it now expects to have less passenger capacity on its flights in 2022 than it did in 2019, rather than the increase in capacity it had previously anticipated. He said the new cuts to its schedule reflect “the impact of Omicron’s surge on demand.”

“While Omicron is impacting short-term demand, we remain optimistic about spring and excited about summer and beyond,” said CEO Scott Kirby.

All airlines faced challenges in the last two weeks of 2021 and the beginning of 2022, due to thousands of flights canceled due to a significant number of crew members who fell ill with Omicron and the bad weather of the American winter.

Last week, Delta reported that these cancellations cost $80 million in the last two weeks of 2021 alone.

Neither American nor United disclosed costs for their own cancellations.

This content was originally created in English.

original version

Reference: CNN Brasil

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