Airlines Are Canceling Even More Flights. What’s Ahead.

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There are many positives for airlines and investors to digest.

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Danielle Slim/AFP/Getty Images

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Airlines are not taking leave from bad weather or Covid-19.

He canceled thousands of flights over the holidays because of a snowstorm and staff members fell ill with the virus and the pain was not going down.

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According to data from flight tracking website FlightAware.com, the carrier canceled 2,600 flights over the weekend—1,300 on both Saturday and Sunday, with nearly 5,000 scrubbed on Thursday and Friday. The number of consecutive days with over 1,000 cancellations is now 15, the same as before December 26.

Flight canceled to or within the US since January 2011.

information about flying

Historically speaking, last week was the worst and worst since last February when a major winter storm hit several states hard, especially Texas. The number of canceled flights reached 10%, which is only the fifth time in the past decade. At the end of March 2020, shortly after the lockdown in most parts of the US, more than 40% of flights were canceled in a single week.

covid chaos

Bad weather and the impact of COVID-19 on staffing have affected almost all airlines in the past few weeks. But some carriers are feeling the fall more than others.

Southwest (ticker: LUV) and United (UAL) had the most number of canceled flights on Thursday, Friday and Saturday, FlightAware.com numbers show.

Southwest Airlines canceled 1,503 flights in three days, or 17% of its schedule; United canceled 610, or 10%. Alaska Air Lines (ALK) canceled 20% of its schedule.

United Airlines blames the rise in Covid cases driven by the spread of the Omicron coronavirus variant.

“The nationwide spike in Omicron cases has had a direct impact on our flight crew and the people running our operations,” a joint spokesman said. baron’s,

Southwest Airlines cited COVID-induced staff shortages and “winter conditions” at several major airports, including Baltimore/Washington, Denver, Nashville and Midway and O’Hare in the Chicago area.

A spokesperson for Southwest said, “As we work to balance staffing amid weather disturbances, our COVID-19 sick calls continue to matter among employees, and close contact between other individuals is essential. Quarantine, experiencing an uptick.” “This uptake … adds another layer of complexity as we work to recover our network.”

In late December, the Centers for Disease Control and Prevention reduced the recommended isolation period for those asymptomatic people from 10 days to five, a move that carriers had pushed for. Shorter isolation times mean airline workers with no symptoms of COVID can get back to work sooner.

And there are other positives for both airlines and investors.

First, this round of cancellations has eased for many airlines and should end as the peaks of the Omicron boom in the US do not seem to have a long-term impact on the sector.

Second, the Omicron version has created a staff crunch, but it doesn’t significantly reduce demand for leisure travel, which has reached near pre-pandemic levels on several key dates.

However, perhaps most important, according to Citi analysts, Omicron’s growth won’t hurt the sector as much as the Delta version did last year.

“Although Omicron appears to be weighing on the unstable seven-day pax” [passenger] Revenue trends for January, the impact seems less severe than it was with the previous edition,” he wrote in a note on Thursday.

a better 2022

Now that the holiday season is over, passenger traffic is likely to subside in the coming weeks before starting again towards summer.

“Since some companies are delaying returning to office in mid-January, we expect a drop in traffic by mid-February. Then we anticipate an increase in travel through spring break and the Easter and Passover holidays, and into the summer months,” said Cowen analyst Helen Baker.

Baker is also optimistic about both business and international travel, which he said could return to 90% of traffic by the end of 2019. Baker’s “best idea” for 2022 is stock United Airlines, which is “prepared to profit from increased international travel” and an extensive list of destinations in the summer.

Delta Air Lines (DAL) stock received an upgrade from Bank of America – buy from neutral. The bank, which also raised its price target from $46 to $48, explained its move, citing the positive effects of a Corporate travel rebound And its strong balance sheet.

Airline stocks have been the most volatile during the pandemic, from lockdowns to a delta surge by scientists in South Africa to an Omicron variant identified in November.

Analysts at JPMorgan said with each edition having less impact on air travel than the previous one, 2022 could be a good year for the sector.

“It is too early to draw a definitive conclusion, but if 2022 is the year when air travel trends diverge from the number of Covid-19 cases (ie governments no longer impose strict travel restrictions with every spike in case numbers), So we would expect very strong performance for the airline and civil aero stocks,” he said in a note on Wednesday.

Analysts are notably British Airways owner International Airlines Group and low-cost European airline Wizz Air. like,

Write to Callum Keown at [email protected]

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