An Endemic Pandemic Can Also Make Airlines Symptomatic

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Delta Air Lines’ latest outlook confirms that Omicron probably won’t derail travel recovery, but repeated Covid-19 setbacks are still bad news for the carrier

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A surge in infections among airline workers and air-control staff — some with winter storms — has led to the cancellation of nearly 30,000 flights across U.S. carriers and airports have warned that fliers are also rethinking their travel plans. Huh. After a resilient December for airline schedules, fresh OAG data shows signs of a January setback as airline network planners return to work: there were 7.8% fewer seats globally this week than in the previous one.

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Yet there have been persistent indications that it is being treated as a temporary setback. Leisure travelers have become accustomed to the additional requirements, and governments are beginning to see that keeping tourists out fails to stop the spread of new forms. From Friday, France no longer obliges Britons entering the country to quarantine.

Furthermore, US carriers are now suggesting that the worst may already be over. If so, it appears to validate a theory increasingly held by those on Wall Street who are enthusiastic about aviation stocks: COVID-19 is turning from a “pandemic” that is turning the world into a “pandemic”. endemic” issue with which we can coexist, thanks to the low mortality rate of vaccines, therapies and new variants. The Dow Jones US Airlines Index is up 7% this year, compared to a 2% drop for the S&P 500.

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“Delta’s operations have stabilized and returned to pre-holiday performance over the past week,” said Delta Chief Executive Ed Bastian, who determined the Omicron disruption to be just a 60-day delay in air-travel recovery. Delta is, as always, the first major US airline to release quarterly financial information, but its rival American Airlines also provided investors with optimistic guidance about its fourth-quarter performance this week.

It makes sense for investors to watch for short-term bumps. However, his mistake in 2021 was to put too much stock in the strength of the domestic aviation recovery, only to be wary of how slowly business and international travel bounced back. An endemic pandemic will probably perpetuate this divide: Recurring health risks make it much harder for companies to justify events overseas when video calls may work, and fears of travel restrictions have a major impact on longer trips.

Carriers are seeing gains in premium leisure cabins, but these are unlikely to replace the profit margins that have been made by business class to full-service operators. American airlines have also shifted their focus to their domestic bright spots and are investing heavily in bigger planes to lure back high-paying customers, meaning lower yields even as traffic booms. Jefferies estimates that by 2024, the number of seats in the US narrow-body fleet will increase by 21 percent.

A lighter version is good news for airlines looking at options. A chronic disease is still not a sign of ship-sized health, however.

Write John Sindreu [email protected] . Feather

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