Delta Union Files SCOPE Grievance | 2nd Filing In Less Than 6 Months
Southwest Saves Boeing | What Does This Huge Order Mean For Hiring?
Southwest Airlines (LUV), a top Boeing (BA) 737 customer, says it could need up to 500 new aircraft as it expands routes across the U.S. in the waning days of the coronavirus pandemic. Boeing stock rose.
We're going to have to acquire more airplanes to be able to restore the rest of our route network," CEO Gary Kelly told the Dallas Morning News. "And now that travel demand is coming back to life, we need to restore that capacity, and it will take us a while because we've diverted airplanes to these new markets."
Any new planes will be Boeing 737 jets. "We're not thinking about another airplane at all," Kelly told the Dallas Morning News.
American & Delta | Focusing On The Rich To Boost Their Recovery
Delta Air Lines, which has been on a quest to be known as a premium airline in the marketplace, saw premium cabin revenues come back stronger during the crisis. At the same time, American Airlines saw its position strengthened with strong premium cabin revenues coming in ahead of the airline’s economy cabins.
American: “Things we’ve been really encouraged by actually, as the crisis unfolded, is that premium revenues have held up much greater than what we have anticipated. If economy revenues are down 50% to 60%, premium revenues in the domestic system are at half of that, and we’re able to go and generate traffic.”
American was also encouraged by signs where customers purchased an economy ticket and then upgraded to a premium cabin.
Delta: “The premium cabins are everything above Main Cabin. What we see is a recovery in those that is running 10 points ahead of Main Cabin recovery. So if our main cabin is 75% restored, our premium products will be 85% restored. So, that that to us as a real point that our hypothesis that there is demand for premium products for broader perspective than just traditional business customers is valid.”
All airlines have succinctly stated that the large corporate customers who typically book up front are coming back much slower than leisure and smaller business customers. So, the premium cabins are roughly a good mix of leisure travelers willing to buy up and small- and medium-sized business customers that are willing to pay for the premium cabin.
Once business travel comes back, airlines will likely start to price out some of those newfound customers booking in the premium cabin. Especially on long-haul international flights, the deals to sleep in a lie-flat on the way to Europe will start to evaporate as business-centric customers start to fill up planes to Zurich, Paris, London, Frankfurt, and other top cities.
Airlines Rally | Highest Travel Numbers Posted Since Pandemic Hit
U.S. airlines rose as the country’s three biggest carriers said a travel rebound is gaining steam, with United Airlines Holdings Inc. and Delta Air Lines Inc. heading for the highest closing price in about six weeks.
The upbeat outlooks from all three companies validate expectations that a U.S. travel recovery will strengthen this summer as expanding vaccination rates prompt more Americans to fly again. Domestic travel yields, a measure of the average fare for each seat flown a mile, are expected to surpass the pre-pandemic levels of 2019 this summer, United said.
When summer trips wind down, United expects “a big ramp-up in business traffic across the country,” as more people return to the workplace and resume traveling for their employers, Chief Executive Officer Scott Kirby said.
The rebound in demand is big enough that United said it now expects positive earnings before interest, taxes, depreciation and amortization in June and the third quarter, after excluding one-time items. Last month, the company declined to put a timetable on its financial recovery, even as Delta reiterated that it expected to eke out a third-quarter profit.
Business travel remains subdued but non-leisure bookings are showing signs of recovery, United said in a securities filing. American is seeing something similar and expects further gains to materialize later in the year, CFO Kerr said.