American leads US airlines betting on full business recovery in 2022

Change Take

American Airlines is optimistic that road warriors will return en masse in 2022. But the airline faces its share of challenges, including a lack of clarity about sanctions for unvaccinated Covid-19 personnel and pressures. of costs arising from rising fuel prices and delays. and Boeing.

Edward Russell

American Airlines is optimistic about recovering business travel. The carrier expects revenue from the lucrative segment to fully recover by the end of 2022, joining Emirates to take an openly optimistic stance on the return of corporate flyers.

“We remain very bullish on the return of demand,” U.S. President Robert Isom said Thursday during a third-quarter profit call. Business travel revenue stood at about half of 2019 levels in late September after surpassing nearly 60 percent of the levels seen two years ago in July before the Delta variant delayed the recovery, he added.

Business trips have been delayed in the recovery of the Covid-19. While the latter segment has shown its willingness to fly during the pandemic, either to escape to outdoor-oriented destinations in 2020 or to make delayed trips to see the family this year, the former has been left behind. Most companies face a duty of care that has left travel managers hesitant to send warriors from road to road while the risk of taking Covid-19 remained high.

“I feel time and time again that we need to get back to the office, and once we get back to the office, trips will come,” Isom said, citing comments at a meeting of the top 50 U.S. corporate clients in early October. Expectations are that many companies will return staff to offices in January.

American is alone among American airlines forecasting a full recovery of the business next year. Both Delta Air Lines and United Airlines have forecast a turning point earlier this year along with returns to the office, but neither has gone so far as to say the segment will return to 2019 levels in 2022. Both they expect a full recovery in the medium to long term.

And the Covid-19 virus has proven time and time again to be a cunning adversary. The falls in case the figures have ended up repeatedly in rises, with the Delta variant causing a slowdown in demand in August and September. American was among the many companies that pulled back their third-quarter outlook in September, and Isom cited significant market “uncertainty” at the time.

Driven in part by their business travel forecasts and strong demand for leisure, Americans plan to fly “very close” to their capacity for 2019 next year. Overall booking rates for November and December, as well as for 2022, exceed 2019 levels, executives said.

Accommodation for unvaccinated staff

American is making a fine line about Covid-19 vaccines for staff. The company did not want to mandate them until an executive order from President Biden demanded firing for all government contractors, including airlines. But the debate has continued with its pilots’ union opposing a mandate, and in comments Thursday Isom said they “don’t expect anyone to leave” the airline.

But here lies the friction: Americans don’t expect all staff to get their annoyances and those who don’t will look for exemptions and be accommodated, as Parker said. However, he also acknowledged that not everyone who applies for an exemption will receive one. And what about these employees? “We fully expect them to be vaccinated,” he said talking around the unvaccinated, unvaccinated elephant in the room.

Given the controversy over Covid-19 vaccines and public statements against a few blows by some U.S. employees, there is a high probability that at least several hundred professionals will fall into the category of unvaccinated and uninjured. The lack of a firm stance on Parker and his team could encourage some staff members to try to sideline the rule if they don’t believe the sanctions are harsh.

United, which was the first U.S. airline to command the coups, is deciding to lay off more than 200 employees who have refused to be vaccinated and received no exemptions.

Asked about United CEO Scott Kirby’s warning that airlines without a vaccine warrant could suffer operating disruptions this winter, Parker said he doesn’t anticipate any such problems. Accommodation for exempt employees will not be “annoying for the operation,” he said.

Parker refused to provide a percentage of vaccinated U.S. personnel. Delta executives said Oct. 13 that 90 percent of the company’s staff received their inoculations and that more than 99.7 percent of United’s workforce is vaccinated.

U.S. regional affiliates operating American Eagle flights are not subject to the federal contractor’s vaccine mandate nor do they have corporate mandates, Parker added.

I The numbers

American reported a net loss of $ 641 million, excluding the benefit of federal aid Covid-19 during the third quarter. Both revenue and expenses decreased by approximately 25%, to nearly $ 9 billion and $ 8.4 billion, respectively, compared to 2019. As with its competitors, other key metrics also fell: traffic of passengers 26%, capacity 19.4% and total unit revenue. 6.6 percent. Unit costs without fuel and special items rose 10.6 percent.

Looking to the future, Parker was optimistic during the fourth quarter, but said weak business demand and rising oil prices will present challenges. U.S. forecasts paid an average of $ 2.43-2.48 per gallon for fuel in the fourth quarter, an increase of at least 17% over the third quarter. In addition, delays in the delivery of at least eight Boeing 787-8 aircraft (and potentially 11) that were due in 2021 will increase unit costs for the period.

The U.S. expects revenue of about 80 percent from 2019 levels in terms of capacity, between 87 and 89 percent two years ago, in the fourth quarter.

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