The U.S. airline industry was almost at the brink of collapse as the pandemic shut down borders and people stayed confined to their homes last year. This, however, seems to be changing as restrictions continue to get eased and the economy further reopens.
Although the road to recovery is long and tough, the process seems to have started as millions of Americans appear a bit confident with the vaccination drive in full swing. Given this scenario, this summer could prove to be a great one for the U.S. airlines industry, with ticket sales and traffic already pickling up.
Airlines on Road to Recovery
With almost 50% of Americans above the age of 18 having received at least one dose of the COVID-19 vaccine, people are a lot more confident. This has also seen the Centers for Disease Control and Preventions (CDC) easing restrictions.
Fully vaccinated people are now no longer required to wear marks indoors or outdoors. The CDC has also revised its travel guidelines. Although people need to wear masks while flying, those who are fully vaccinated or have recovered from COVID-19 in the past three months, no longer need to get tested or self-quarantine upon traveling.
The past few weeks have already seen airlines getting busier as more people are booking tickets and traveling. According to a Simply Flying report, the Transportation Security Administration witnessed a whopping 1.85 million passengers flying across the United States on May 16. If the trend continues, airline companies are likely to see a great summer.
Traveling Set for a Rebound
Although many countries are still struggling to manage the rising COVID-19 cases, a number of others are relaxing restrictions, thanks to the vaccination drive adopted by them. These countries are gradually lifting bans on international travel.
The International Air Transport Association (IATA) has also predicted that air travel will rebound this year. IATA also predicts domestic travel to pick up as restrictions get eased further. IATA predicts domestic travel to recover by up to 96% of the pre-crisis levels by the second half of 2021, improving 48% year over year.
This has seen airline companies gearing up to handle more passengers in the coming weeks. North American passenger carriers have also resumed hiring, indicating that passenger traffic will increase in the near term.
Southwest Airlines Co LUV plans to reinstate 2,700 flight attendants who were sent on voluntary leave following the coronavirus outbreak when almost the entire fleet had to be grounded. Southwest has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
American Airlines Group Inc. AAL, United Airlines Holdings Inc. UAL and Delta Air Lines Inc. DAL lost more than $1 billion each in the first quarter of this year but are confident about a rebound this year. American Airlines is hopeful about selling over 90% tickets mainly within the United States this summer, much like it did in 2019.
Southwest, which carried the maximum number of passengers than any other U.S. airline in 2019, returned to profit in the first quarter and is hopeful about traffic rebounding.
Moreover, American Airlines and JetBlue Airways Corporation JBLU will be adding 24 new routes across eight cities this summer as part of their Northeast Alliance partnership. Last week, United Airlines said that it plans to resume flights to Croatia, Greece and Iceland this summer. Also, it has plans to expand its flights by 20% to the neighboring North American countries.
With Memorial Day around the corner, booking is likely to swell. Passengers are flowing in but airlines are still not out of the woods. However, the recovery has definitely started with both bookings and hiring on the rise.