Moving over the worst phase of the pandemic gloom, airlines recovered gradually, with passenger revenues rebounding from rock bottom. Air-travel demand made a stronger-than-expected recovery as people are again booking flights, thereby boosting passenger revenues, which account for the bulk of most airlines’ top lines.
Following the removal of coronavirus-induced restrictions, pent-up demand is driving traffic for the airlines. Despite inflationary pressures and the resultant high-interest rates, there is a wave of optimism in the United States surrounding air-travel demand. Given this rosy backdrop, U.S. airlines like Delta Air Lines (DAL – Free Report) , United Airlines (UAL – Free Report) and American Airlines (AAL – Free Report) are likely to have a very hectic schedule this Thanksgiving week. All the above-mentioned airlines currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
To meet the anticipated demand swell, U.S. airlines are boosting capacity despite the labor crunch that has gripped them. The labor crisis apart, fuel costs remain elevated inducing high air fares. However, these headwinds are unlikely to have a significant adverse impact on the passenger volumes in the Thanksgiving period, as people are very eager to travel after being confined to their homes during the pandemic.
Per the American Automobile Association (AAA), air-travel during the Thanksgiving holiday period this year is likely to be 8% more than the 2021 actuals. Passenger volume by air this year (4.51 million) is likely to be 99% of the 2019 levels (pre-coronavirus era). Moreover, the prevalence of remote working is currently expected to ease the congestion with respect to air-travel this year as remote working helps many people travel on days where the rush is likely to be relatively less and air-tickets comparatively cheaper.
Upbeat Projections From Airlines
United Airlines expects to make the most of buoyant air-travel demand this Thanksgiving spell. Anticipating high passenger volume, UAL expects to transport 12% more passengers from the 2021 levels during the Thanksgiving travel period.
United Airlines reportedly anticipates transporting 5.5 million passengers during the Thanksgiving sojourn. The projected passenger volume is roughly the same as the 2019 actuals (pre-coronavirus era). To meet this expected spike in demand, UAL intends to operate 3,700 plus flights (on average) daily during the Nov 18-Nov 30 time frame. Management believes that passenger volume will touch the maximum on Nov 27 (the Sunday after Thanksgiving) since the start of the COVID-19 pandemic. More than 460,000 passengers are expected to travel on UAL flights that day. United Airlines will operate roughly 275 extra flights on the said date to meet the anticipated demand upsurge.
American Airlines also expects Nov 27 to be the busiest travel day. Management expects 6.8 million passengers to be transported on AAL flights during the Thanksgiving vacation (Nov 17-Nov 27). To meet this demand revival, AAL intends to operate more than 66,000 scheduled flights across its network. On Nov 27, around 5,500 scheduled flights will be operated by AAL.
Delta expects to attract nearly 6 million passengers to its flights over the Nov 18-Nov 29 period. This translates into nearly 500,000 passengers, on average, per day. DAL’s projection this year is a tad less than the 6.3 million passengers, who availed the airline’s flights during the Thanksgiving trips in 2019.
Expressing delight at the likely high passenger volumes this year over the Thanksgiving holiday period, Delta’s CEO Ed Bastian said, “The holidays are all about connecting with loved ones, and after two years of disruption and unknowns, those connections are more important than ever.” Thanks to the hard work of our more than 80,000 people around the globe, Delta customers can expect the very best service and industry-leading reliability as they reconnect this holiday season. Our teams are ready to serve.”
The above write-up clearly suggests that passenger volumes will be high over the Thanksgiving outing this year. High passenger traffic despite headwinds like labor shortage bodes well for the airlines. Steep air fares coupled with strong passenger volumes mean that the top lines of U.S. carriers will be significantly bolstered by the upbeat air-traffic expected over the Thanksgiving break. This should aid the aviation space immensely as it bounces back from a crippled stage, thanks to the deadly pandemic blows.