As US airlines begin to publish their 2021 first quarter results this week, all eyes will be on their predictions for the critical summer travel season that is expected to recover with the large-scale vaccination efforts in the country.
Delta Air Lines Weekly Chart
American Airlines Weekly Chart
Signs of Revival
Despite these warnings, there are some promising signs that Americans are helping to reduce losses for airlines by traveling more within the country. On April 4, more than 1.5 million passengers passed through domestic flights security checkpoints. A year ago this number was only 122,029.
United and American said their planes were about 80% occupied. Delta said in a statement last week that “as more of our workforce is vaccinated and more pilots return to active flight,” its reliability will improve this spring and summer.
This rally demonstrated investors’ confidence that the successful development of vaccines will help improve travel demand, ultimately benefiting the biggest hit members of the stock market.
However, due to international travel bans and still weak business travel, a rebound in travel demand may not come as quickly or as strongly as some investors hoped.
Cowen analisti Helane Becker:
“Globally, for people to travel internationally, countries need to reopen their borders and reopen points such as tourist attractions. Airlines need economies and borders to reopen, and then the income problem will be solved by itself.”
United Airline CEO Scott Kirby stated in January that there was plenty of evidence that there was a serious backlog of demand for travel, but Kirby was not confident that travels could start as early as this summer.
According to some estimates, there may be a 15% reduction in the business travel category due to the video-conferencing trend that became popular during the epidemic period.
According to Deutsche Bank, US airlines will continue to struggle, with a record debt burden of $ 170 billion. According to the bank, “airlines will have no choice but to devote a large portion of their free cash flow to debt payments.”
A sharp rebound in airline stocks shows investors confidence that people will continue their normal travel after vaccination. However, this optimism is highly reflected in the current share prices and leaves no room for an additional rise in the short term.
The new revenue reporting period will likely show that airlines have a long way to go to recover losses and return to profitability.