Business travel

American Airlines optimistic about full business travel recovery in 2022


American Airlines optimistic about full business travel recovery in 2022

American Airlines is optimistic about the resumption of business travel. The carrier expects revenues from the lucrative segment to fully recover by the end of 2022, joining Emirates in an openly bullish stance on the return of corporate flyers.

“We remain very optimistic about the return of demand,” US President Robert Isom said Thursday on a third quarter earnings conference call. Business travel revenue was around half of 2019 levels at the end of September after peaking at nearly 60% of levels seen two years ago in July before the Delta variant slowed the recovery, a he added.

Business travel has lagged behind leisure travelers in the recovery of Covid-19. While the latter segment has shown a willingness to fly during the pandemic, whether it’s escaping to outdoor destinations in 2020 or taking postponed trips to see family this year, the former has fallen behind. Most companies face a duty of care that made travel managers hesitant to send road warriors back to the road as the risk of catching Covid-19 remained high.

“I hear over and over again that we have to get back to the office, and once we get back to the office, the trips will come,” Isom said citing comments at a meeting of America’s Top 50 Business Customers earlier. in October. Many companies are expected to fire their staff to their offices by January.

American is the only US carrier to expect a full recovery in business next year. Delta Air Lines and United Airlines both predicted an inflection point at the start of the year associated with office returns, but neither went so far as to say the segment will return to 2019 levels in 2022. two expect a full recovery. over the medium to long term.

And the Covid-19 virus has repeatedly proven to be a cunning opponent. Declines in the number of cases have ended in flare-ups on several occasions, with the Delta variant causing demand to slow down in August and September. American was among many carriers who revised their outlook for the third quarter in September, with Isom citing significant “uncertainty” in the market at the time.

Driven in part by its business travel forecast and continued strong leisure demand, American plans to fly “very close” to 2019 capacity next year. Overall booking rates for November and December, as well as 2022, are above 2019 levels, executives said.

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Accommodation for unvaccinated staff

American is walking a fine line on Covid-19 vaccines for staff. The carrier refused to mandate them until an executive order from President Biden demanded the shots for all government contractors, airlines included. But the debate continued with his pilots union opposing a warrant and, in comments Thursday, Isom said they “don’t expect anyone to leave” the airline.

But here’s the rub: American doesn’t expect all staff to get their jabs and those who don’t will seek exemptions and be housed, as Parker said. However, he also acknowledged that not everyone who asks for an exemption will receive one. And what happens to these employees? “We expect them to get vaccinated,” he said, speaking around the unvaccinated, non-exempt elephant in the room.

Given the Covid-19 vaccine controversy and public statements against the jabs of some U.S. employees, it’s highly likely that at least several hundred employees fall into the unvaccinated and non-exempt category. The lack of a firm stance from Parker and his team could encourage some staff to try and get around the rule if they don’t believe the penalties will be severe.

United, which was the first US airline to impose the jabs, is set to lay off more than 200 employees who have refused to be vaccinated and have not been granted exemptions.

Asked about United CEO Scott Kirby’s warning on Wednesday that airlines without a vaccine warrant could face operational disruption this winter, Parker said he did not foresee such problems. Accommodations for exempt employees will not be “cumbersome for the operation,” he said.

Parker declined to provide a percentage of U.S. personnel vaccinated. Delta executives said on Oct. 13 that 90 percent of the carrier’s staff had received their vaccines and that United’s workforce was over 99.7 percent vaccinated.

American regional subsidiaries that operate American Eagle flights are not subject to the federal contractor’s vaccine mandate and have no corporate mandate, Parker added.

And the numbers

American reported a net loss of $ 641 million excluding benefit from federal Covid-19 aid in the third quarter. Revenue and spending fell about 25 percent to nearly $ 9 billion and $ 8.4 billion, respectively, from 2019 by 6.6 percent. Unit costs excluding fuel and special items increased by 10.6%.

Looking ahead, Parker was optimistic for the fourth quarter, but said weak business demand and rising oil prices will present challenges. The US forecast is paying an average of $ 2.43 to $ 2.48 per gallon for fuel in the fourth quarter, which is an increase of at least 17% from the third quarter. Additionally, delivery delays of at least eight – and potentially 11 – Boeing 787-8s scheduled for delivery in 2021 will drive up unit costs for the period.

American is forecasting revenue at around 80% of 2019 levels on 87-89% capacity from two years ago in the fourth quarter.

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