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Aviation Blog

Southwest Airlines Expects Delta Variant to Crimp Demand – The New York Times



Southwest Airlines no longer expects to turn a profit in the third quarter as a recent rise in coronavirus cases slows sales and drives an increase in cancellations.
In a securities filing on Wednesday, the company forecast revenue for the three months that end in September to be down 15 to 20 percent from the same period in 2019, a decline of three to four percentage points from its previous estimate.
The revised forecast is a rapid turnaround from a few weeks ago, when Southwest and other major carriers said that business was booming and that the highly contagious Delta variant of the virus was not yet affecting sales. In fact, Southwest said Wednesday that it was profitable again in July, but that it no longer expected to turn a profit for the current quarter, at least after excluding the effect of federal payroll aid to the industry.
Late last month, Scott Kirby, the chief executive of United Airlines, said the Delta variant had not affected sales at all. “The most likely outcome is that the recovery in demand continues largely unabated,” he said on a call to discuss quarterly financial results with analysts and reporters.
After climbing for months, the number of people flying in the United States appears to have stagnated in recent weeks at about 80 percent of 2019 levels, according to Transportation Security Administration airport screening data. Still, more than 2.2 million people were screened on Aug. 1, the most relative to 2019 since the pandemic began. The rebound so far has mainly been driven by people traveling on vacations or visiting friends and family.
Airlines had hoped that growing confidence in travel and a widespread return to offices in the fall would help accelerate a recovery in business travel, which has lagged behind the leisure rebound. But the Delta variant has dashed those hopes as a growing number of companies delay their office reopenings.


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