An American Airlines Boeing 737-800, equipped with a radar altimeter that could conflict with 5G telecommunications technology, could be seen flying 500 feet above the ground on its final approach to descent. landing at LaGuardia Airport in New York City, New York, USA, January 6, 2022.
Bryan Woolston | Reuters
The leaders of the country’s biggest airlines learned a hard lesson this summer: It’s easier to plan than to keep them.
The three largest US carriers – Delta, United and American – are returning to their flight growth ambitions, an attempt to fly more reliably after biting more than they can chew this year as they pursue an unprecedented recovery in travel. schedule, despite a range of logistics and supply chain constraints and staffing shortages.
The cuts come as airlines face rising costs that they have not yet seen a significant reduction, coupled with the possibility of a recession and questions about spending by some big business travelers. most of the country.
Shares of the three major US carriers fell on Thursday, while the broader market was higher.
Buffer construction
United Airlines is estimated to restore 89% of 2019 capacity levels in Q3 and around 90% in Q4. In 2023, it will increase its schedule to no more than 8% of 2019 capacity, down from 2019 levels. earlier forecast that it would fly 20% more than it did in 2019, before the Covid-19 pandemic hit.
“We’ll basically continue to fly in today’s numbers, less than we intended, but not develop the airline until we can see evidence that the entire system can support it. it,” United CEO Scott Kirby said in an interview with CNBC’s “Fast Money” after reporting the results Wednesday. “We’re just building more cache into the system so we have an extra chance of reaching those customers.”
American Airlines CEO Robert Isom also spoke of a “buffer” after reporting record revenue on Thursday. That airline has been more aggressive than Delta and United in restoring capacity but said it will fly 90%-92% of its 2019 capacity in the third quarter.
“We continue to invest in our operations to ensure our reliability and service delivery goals are met,” Isom wrote in an employee note, discussing the company’s operations. Airlines. “For the rest of the year, we’ve taken proactive steps to build additional buffers into our schedule and will continue to limit capacity to the resources we have and the conditions we have.” operating conditions we face.”
For its part, Delta has apologized to customers for the series of flight cancellations and disruptions and last week said it would limit growth this year. Earlier, they announced that they would be cutting their summer schedule.
On Wednesday, Delta deposited 10,000 miles into the accounts of SkyMiles members who had flights canceled or delayed by more than three hours between May 1 and the first week of July.
“While we cannot recover lost time or worry caused, we will automatically deposit 10K miles into your SkyMiles account as a commitment to do better for you in the future and restore the Delta Difference you know we’re capable of,” the e-mail said to the customer, a copy of which was viewed by CNBC.
By cutting schedules, airlines are able to keep fares stable at sky-high levels, a key factor to their bottom line as costs continue to rise, despite bad news for travelers.
Henry Harteveldt, founder of the Atmospheric Research Group and a former airline executive, said: “The more limited the capacity airlines have, the higher the airfares they can charge.
Preserving profits is key with economic uncertainty ahead.
“They won’t get another bailout,” Harteveldt said. “They squandered a lot of their goodwill.”
More disruptions, more revenue
As of May 27, Memorial Day Friday weekend, 2.2% of flights by US-based airlines have been canceled and nearly 22% delayed, according to flight tracker FlightAware . This is up from 1.9% of flights canceled and 18.2% of delays in the same period in 2019.
Staffing shortages have exacerbated routine problems airlines already face, such as thunderstorms in the spring and summer that stagger thousands of travelers as airlines run short of staff. backup member.
Airlines have received $54 billion in federal payroll aid banning layoffs, but many of them have put pilots out of work and called for employee buybacks to cut costs during the show. out pandemic.
Similarly, airport staff shortages at major European hubs have also resulted in flight cancellations and capacity limits. Officials of London Heathrow last week told carriers they needed to limit departure passenger capacity, forcing some airlines to cut flights.
“We told Heathrow how many passengers we were going to carry. Basically, Heathrow told us: ‘You’re smoking something,'” United CEO Kirby said. on Wednesday. “They don’t have staff for it.”
A representative for Heathrow was not immediately available for comment.
However, the three major US carriers all posted second-quarter profits and are optimistic about strong tourist demand throughout the summer.
For American and United, it was their unlucky first quarter since pre-Covid, without federal support. Revenue for both airlines increased above 2019 levels.
Each carrier forecasts third-quarter profits as consumers continue to fill seats with fares far outpacing 2019 prices.
