Airline bookings start to tumble again as coronavirus cases spike

Near-term bookings at United’s hub in Newark were only 16% of 2019 bookings through July 1. Just a couple weeks earlier, United’s bookings were down “only” 33% from the year earlier in the day. Although United would not release the details of the briefing being given to its employees this week, it confirmed the reality detailed in the Journal’s report.

Delta Air Lines (DAL) confirmed to CNN that its booking trends in the New York area are similar to United’s, though it did not release statistics.

Other airlines are not commenting on the bookings. But other airlines’ bookings are likely also falling as Covid-19 cases increase, said Philip Baggaley, chief credit analyst for air companies at Standard & Poor’s.

“It certainly could be a jagged recovery,” that he said. “The initial surge in bookings, there was probably some pent-up demand inside. There’s without doubt that the increase in [Covid-19] cases and quarantines throws a monkey wrench engrossed.”

He said travel to the New York area, as well as Florida, Texas and Arizona will be specially hard hit.

“There’s so much uncertainty about the virus and that’s feeding people’s fears and perceptions about the safety of travel,” that he said. “A second wave was always a downside risk for the overall economy and the airlines in particular.”
United was one of five airlines, alongside Delta, Southwest (LUV), Alaska (ALK) and JetBlue (JBLU), to make application for a new round of loans available to them beneath the CARES Act, the Treasury Department announced Tuesday. American Airlines (AAL), the nation’s largest airline, plus some smaller carriers applied for the loans a week ago.

The air companies already received $25 billion in the help of the first the main act. This new round of loans could find yourself totaling yet another $25 billion. The air companies have until September 30 to decide to close on the brand new loans. Delta, Southwest and United said Tuesday they’ve yet to make a firm decision on whether they will require the additional federal help. Baggaley predicted some airlines wont take the excess loans.

“No one has ruled it out certainly,” he said.

Recent signs of returning demand

The news comes right after TSA screened 3.4 million people during the five days from Thursday through Monday round the holiday week-end. That was only 29% of the amount screened through the same days last year, but it’s a big increase from the couple months ago. TSA screened only 3.3 million people at airports in all of April — less than 5% of its April 2019 screenings.
United and other air companies have been adding flights for the remainder of the summer to try to accommodate the increased demand for summer travel. American announced that as of last Wednesday it would start selling the center seats that it had kept open to help maintain social distancing between passengers.

But with the surge in Covid-19 cases and signs of a drop in bookings, air companies that added flights could have gotten in front of themselves. They could soon be flying mostly empty planes and running up losses once again.

Airlines for America reports that 39% of the planes in the US air companies fleets remain grounded plus they are operating only 46% of these normal flights. Earlier this spring more than half the planes were grounded and schedules have been cut by 70% to 80%.

The airlines have not given up on cost cutting efforts. They are providing early retirement packages and voluntary buyouts as they attempt to cut their workers. The air companies all believe it will take years for travel to recover to 2019 levels and they will need to all become much smaller as an effect.

United will undoubtedly be sending notices of potential layoffs to employees, the Journal reports. Airlines aren’t allowed to have involuntary job cuts until October 1 under terms of the federal aid they received.

Scott Kirby, the brand new CEO of United, told company shareholders in June that he hoped to have the ability to use voluntary buyouts and retirement, along with new labor relates to airline’s unions, to cut labor costs enough to avoid involuntary layoffs. But so far no labor deals have been reached.

— CNN’s Gregory Wallace contributed to this report