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Business travel stirs, but many road warriors stay grounded

Business travel stirs, but many road warriors stay grounded

Of the 2 million people clogging airport security lines and gate areas again each day, one crowd is still largely missing: business travelers.Their absence is noteworthy because they are a key source of revenue and profit, underpinning a record-breaking stretch of financial gain for U.S. airlines that ended with the coronavirus.Business travelers tend to pay higher fares, and that is especially true on international flights, which are also still deeply depressed by the pandemic and travel restrictions around the globe. Because their fares subsidize other passengers, their absence is leading to higher leisure fares on many routes, experts say.Business travelers also spend money on hotels, meals and other things. The U.S. Travel Association estimates that domestic and international business travelers spent more than $300 billion here in 2019. The group forecasts that dwindled to about $95 billion last year and won’t fully recover to 2019 levels until 2024.During calls with Wall Street analysts last week, U.S. airlines said business travel has picked up in recent weeks but is still down more than half from this time in 2019.Airlines have been hoping for a major boost in business travel in September, as schools and more offices reopen. Now, however, that optimism is being tempered by the rise in COVID-19 cases around the country fueled the delta variant.“We are encouraged by the trends that we see out there, but we really are planning that a material amount of business travel won’t come back until after the October period,” Vasu Raja, American Airlines’ chief revenue officer, said last week.Airline executives are counting on people like Vazar Lukovic, who owns a digital marketing agency and a production company near London. Lukovic says he is willing to put up with higher prices on some of his flights to places like Moscow and Belgrade, plus the cost of mandatory COVID-19 tests.“You know, Zoom meetings, they can only go so far,” Lukovic said. “When you meet in person — whether it’s that energy or what they say about the feeling or the vibe — it’s just so much more personal.”Unable to travel last year, many companies relied instead on video platforms, including Zoom. Opinions vary about how quickly corporate travel will recover, and whether some of it will be permanently replaced by videoconferencing.Delta Air Lines says business travel was 20% of normal in the first quarter, 40% in the second, and will hit 60% in September. The airline isn’t predicting whether business travel will ever return to pre-pandemic levels, but if it does, it won’t happen quickly. A Delta survey of its corporate customers finds that only 57% plan to be back to full travel by the end of 2023.Delta CEO Ed Bastian says business travel will change.“I do think that maybe 10% to 20% of the previous business travel will be lost, but I think you’re going to find new forms of travel,” Bastian said in an interview. “There will be new reasons why people travel.”Bastian says some things, like overnight trips to business meetings in Europe, will be dropped because they are an inefficient use of time. But he says there will be new demand to network by meeting people after being introduced on Zoom.Aside from their own surveys, which airlines are often unwilling to disclose, there are few precise numbers about business travel. The industry trade group Airlines for America estimates that before the pandemic about 30% of trips were taken for business reasons, and that those travelers accounted for between 40% and 50% of airline revenue.Some experts thinks business trips might be fewer and more carefully selected.“Things have changed,” says Brendan Drewniany, public-relations director for Black Tomato, a luxury-travel company. “There is less an expectation to have a volume of back-to-back meetings, and in general the trips themselves have been longer and not as rushed, which is actually a plus.”In a survey conducted this month for the Global Business Travel Association, 50% of the 618 companies polled said they already allow non-essential business travel within their own country, with many others expecting to do so in the next three months. However, only 14% were traveling internationally with modest interest in soon resuming cross-border trips, which are more complicated because of travel restrictions, including quarantine requirements in many countries.A separate survey by Bank of America suggests that business travel will recover more slowly than some would want but gives airlines and hotels hope for the long term. Nearly half of U.S. corporate travelers surveyed expect their next business trip won’t happen until at least next year, but 56% expect to eventually travel more than they did before the pandemic, compared with 31% who expect to travel less, according to the bank.Denise Daniel, who manages travel for Domo Inc., says U.S. sales people are on the road while the business-research firm is doing little to no travel in Europe, Australia and Japan because of virus-related restrictions. The 800-employee company has tightened its process for approving travel because of liability concerns, although it is not requiring vaccination before travel.Daniel believes that the pandemic will lead to different kinds of travel, but not necessarily less: fewer conferences, more chances for far-flung employees to get together on projects.“We realized how much we value in-person meetings — that collaborative dynamic when people are with each other — but we don’t want people to travel for things that could or should be handled virtually,” Daniel says. “We have learned how to take care of non-essential meetings in probably a better way for the environment and a better way for the budget.”Marie Swift, who runs a marketing-communications firm in Falls Church, Virginia, used to travel about every other week for consulting, conferences and speaking engagements, but during the pandemic she didn’t fly for 14 months.Swift booked a flight to New York in early September for a gala where her company is up for an award. If the nation hasn’t reached “some sort of herd immunity” by then, Swift says, “I will be the double-masked lady with a ball cap and glasses on, air vents full-force … wiping down my tray, armrests, and seat-belt buckle.”She has nine more business trips scheduled between September and early November. Will she be on board, or will she cancel?“We’ll see how it goes.”———Urooba Jamal in London contributed to this report.David Koenig can be reached at www.twitter.com/airlinewriter

Southwest, American post 2Q profits as air travel picks up

Southwest, American post 2Q profits as air travel picks up

Travelers are returning to flying, and it’s showing up in higher revenue for the airlinesBy DAVID KOENIG AP Airlines WriterJuly 22, 2021, 9:15 PM• 5 min readShare to FacebookShare to TwitterEmail this articleDALLAS — American Airlines and Southwest Airlines both posted second-quarter profits on Thursday thanks to generous federal pandemic relief that covers most of their labor costs.The reports on Thursday underscored the progress that airlines are making in rebuilding after the coronavirus crushed air travel — and how much farther they must go to fully recover.American eked out a second-quarter profit of $19 million due to nearly $1.5 billion in taxpayer support. Southwest reported a profit of $348 million, including $724 million in federal help.Southwest said it made money in June even without the government aid and hopes to be profitable by any measure in the third and fourth quarters if the pandemic doesn’t get worse.Southwest CEO Gary Kelly said third-quarter travel bookings are “very strong,” and he sees no impact yet from rising coronavirus cases tied to the fast-spreading delta variant.“We are very well prepared to manage and muddle our way through if the delta variant affects our business,” he added.American and Southwest — like Delta and United in the past week — reported revenue far above 2020 levels. That reflects the rising number of people taking flights in the U.S. — now about 2 million a day, or about 80% of pre-pandemic levels. Domestic leisure travel is roughly back to normal, but business and international travelers are still mostly absent.As passengers stream back, flight delays have soared. The problems have been greatest at Southwest and American, which have struggled with hundreds of delayed flights a day.Southwest said 33% of its flights in July have arrived at least 15 minutes behind schedule, the federal government’s definition of a late flight. That’s up from 19% in May, when Southwest had the second-worst record in the industry. The airline said its operation has been slowed by technology issues in June, summer thunderstorms, and the prevalence of leisure travelers with more bags than normal.“We are still offering a decent experience. It’s not what we want because it’s taking (passengers) a little bit longer to get to the destination,” said Chief Operating Officer Mike Van de Ven. He said delays should decline as the airline adds flights and summer storms abate.U.S. airlines persuaded tens of thousands of employees to quit or take long-term leaves of absence last year to help the companies avoid financial ruin. Now they are scrambling to hire workers to keep up with a surprisingly fast rebound in travel.Southwest is recalling some workers from leaves earlier than scheduled. American recently announced plans to bulk up staffing by recalling 3,300 flight attendants from leave later this year and hiring 800 more by next spring. It plans to hire 350 pilots this year and more than 1,000 next year.Excluding federal funds and other special items, American reported a second-quarter adjusted loss of $1.1 billion. That is American’s smallest adjusted loss in any quarter since 2019, and at $1.69 per share it was less than the $2.03 per share loss forecast by analysts, according to a FactSet survey.Fort Worth, Texas-based American’s revenue jumped more than four-fold from a year ago. CEO Doug Parker said American carried five times as many passengers as it did in the same stretch of 2020. Still, revenue was down 37% from the same quarter in 2019.Once summer ends, airlines will need to lure back high-paying corporate travelers if they are to keep boosting their revenue. Carriers say the road warriors are starting to return.American said revenue from domestic business travel has been growing by up to 10 percentage points a month and now stands around 45% of 2019 figures. Chief Revenue Officer Vasu Raja predicted a bump in corporate sales in October, a few weeks after many offices are due to reopen.Southwest’s profit reversed a loss of $915 million in the second quarter of 2020. Excluding federal relief and other special items, the Dallas-based airline said it would have lost $206 million or 35 cents per share — more than analysts’ prediction of a loss of 21 cents per share.Southwest said it hopes to be profitable in the third and fourth quarters even excluding federal pandemic aid but cautioned that the pandemic could upset current booking trends. Airline stocks have gyrated recently on concern that COVID-19 variants and rising infection cases could hinder travel.Revenue quadrupled from a year ago to $4.01 billion but remained 32% lower than the same quarter in 2019.Alaska Airlines, the nation’s fifth-largest carrier, said it earned $397 million in the second quarter. Excluding $503 million in federal aid and other items, Alaska lost $38 million, or 30 cents per share, on revenue of $1.53 billion.Shares of Southwest Airlines Co. closed down 3.5% while American Airlines Group Inc. dipped 1.1%. Alaska Air Group Inc. bucked the trend and rose 0.7%.———David Koenig can be reached at www.twitter/airlinewriter

Southwest, American post 2Q profits as air travel picks up

Southwest, American post 2Q profits as air travel picks up

Travelers are returning to flying, and it’s showing up in higher revenue for the airlinesBy DAVID KOENIG AP Airlines WriterJuly 22, 2021, 4:29 PM• 3 min readShare to FacebookShare to TwitterEmail this articleDALLAS — American Airlines and Southwest Airlines both posted second-quarter profits on Thursday thanks to generous federal pandemic relief that covers most of their labor costs.The reports on Thursday underscored the progress that airlines are making in rebuilding after the coronavirus crushed air travel — and how much farther they must go to fully recover.Southwest said it made money in June even without the federal aid. CEO Gary Kelly said the recent quarter “marked an important milestone in the pandemic recovery as leisure travel demand surged.”Both carriers reported revenue far above 2020 levels. That reflects the rising number of people taking flights in the U.S. — now about 2 million a day, or about 80% of pre-pandemic levels. Domestic leisure travel is roughly back to normal, but business and international travelers are still mostly absent.American Airlines eked out a second-quarter profit of $19 million, including nearly $1.5 billion in federal relief. Without the taxpayer funding and other special items, American would have lost $1.1 billion, or $1.69 per share. Still, that is American’s smallest adjusted loss in any quarter since 2019, and the adjusted loss was less than the $2.03 per share loss forecast by analysts, according to a FactSet survey.Fort Worth, Texas-based American’s revenue jumped more than four-fold from a year ago, but was down 37% from the same quarter in 2019.Southwest reported a profit of $348 million, reversing last year’s loss of $915 million in the same three-month stretch. Excluding federal relief and other special items, the Dallas-based airline would have lost 35 cents per share — more than analysts’ prediction of 21 cents per share in losses.Revenue quadrupled from a year ago to $4.01 billion but remained 32% lower than the same quarter in 2019.As passengers have begun coming back, airlines are adding flights. Last year, as the airlines teetered on the edge of financial ruin, they persuaded thousands of employees to quit or take long-term leaves of absence. Now, labor shortages are contributing to massive flight delays and cancellations, and airlines are scrambling to hire workers.American recently announced plans to bulk up staffing by recalling 3,300 flight attendants from leave later this year and hiring 800 more by next spring. It plans to hire 350 pilots this year and more than 1,000 next year.In trading before the opening bell, shares of American Airlines Group Inc. and Southwest Airlines Co. each fell about 2%.

US airlines say COVID-19 variants aren't hurting bookings

US airlines say COVID-19 variants aren't hurting bookings

Airlines say the current rise in new cases of coronavirus aren’t scaring away travelersBy DAVID KOENIG AP Airlines WriterJuly 21, 2021, 8:54 PM• 4 min readShare to FacebookShare to TwitterEmail this articleRising concern about the fast-spreading delta variant of COVID-19 is creating turbulence for the stocks of big travel companies, but airline executives say they don’t see any slowdown in ticket sales, maybe because a high percentage of their best customers are fully vaccinated.“We haven’t seen any impact at all on bookings, which continue to just get stronger and stronger every week,” United Airlines CEO Scott Kirby said Wednesday.Delta Air Lines CEO Ed Bastian said the same thing last week, although he added that variants were continuing to hobble international travel by delaying the opening of borders.More than 2 million people a day, mostly summer vacationers, are packing U.S. airports. That is a turnaround from the lockdown summer of 2020.The travel recovery took hold earlier this year as vaccinations rose and infection cases fell. Now variants are fueling a tripling in new reported cases of COVID-19 in the U.S. over the past two weeks — although just a fraction of the January peak — and driving outbreaks in other countries.Earlier in the pandemic, airlines saw that bad headlines about the virus would prompt large numbers of people to cancel trips. For much of 2020, cancellations outpaced ticket sales. Americans seem less skittish about the variants now that many of them are vaccinated, airline executives say.United said its cancellation rate has not changed in the last few weeks, although it remains higher than before the pandemic. It could be due to the millions of Americans — particularly those who travel — who have been vaccinated against COVID-19.About 57% of Americans who are old enough for the shots are fully vaccinated, according to government figures. United said that 84% of the members of its frequent-flyer program are vaccinated.Even if travelers are unmoved by the headlines, investors have been spooked. They worry that the rise of variants could lead governments to reimpose travel restrictions that might short-circuit the travel recovery.Airline officials are lobbying the Biden administration to lift restrictions that prevent most Europeans from entering the United States, but the limits imposed in March 2020 remain in place. They note that many European countries have eased border restrictions, leading to a surge in bookings by American vacationers this summer.“We are working closely with the government, and it’s a two-way conversation where they are getting input from us, input for them,” Kirby said on a call with analysts and reporters. “All of us want to make sure we do this safely.”Kirby said the industry has shown willingness to accept vaccination requirements, as many other countries require of visitors from the U.S. and other places.White House press secretary Jen Psaki said Tuesday — without providing many details — that discussions with other countries are continuing. She saw no contradiction in European countries welcoming Americans while the U.S. continues to bar most non-U.S. citizens traveling from Europe.“We give American citizens guidelines. They make their own decisions about whether they travel to certain countries around the world,” she said. “Any decisions about reopening international travel (to the U.S.) will be guided by our own public health and medical experts.”U.S. airlines lost billions last year but are seeing their fortunes improve. Southwest and Delta have recorded profitable quarters in 2021 because of their share of $54 billion in federal pandemic relief for the airline industry. United said this week that it expects to earn money in the third and fourth quarters even excluding the taxpayer help.After they persuaded thousands of employees to quit last year, some airlines have been caught short-staffed by the pace of the travel recovery, leading to a surge in delayed or canceled flights. Now the hiring signs are out.American told employees Wednesday that it expects to hire 350 pilots this year and more than 1,000 next year — more than previously planned. Just last week, American said it will recall 3,300 flight attendants from voluntary leave this year to help handle holiday traffic and hire about 800 more by next spring. Other airlines have also announced hiring goals.In trading Wednesday, shares of American and United closed up 4%, Southwest climbed 3% and Delta rose 2%. Cruise line and hotel stocks also gained.———David Koenig can be reached at www.twitter.com/airlinewriter

United Airlines posts $434 million 2Q loss but revenue up

United Airlines posts $434 million 2Q loss but revenue up

United Airlines is reporting a loss of $434 million in the April-through-June quarter but says it will start turning a profit soonBy DAVID KOENIG AP Airlines WriterJuly 20, 2021, 9:27 PM• 3 min readShare to FacebookShare to TwitterEmail this articleUnited Airlines reduced its quarterly loss to $434 million and posted surprisingly strong revenue as U.S. vacation travel picked up.In reporting its second-quarter results Tuesday, the Chicago-based airline said it expects to earn a pretax profit in the remaining two quarters of the year. That would break a string of six-straight money-losing quarters since the pandemic began to crush air travel.“Our airline has reached a meaningful turning point: We’re expecting to be back to making a profit once again,” CEO Scott Kirby said in a prepared statement.However, United is trailing key rivals as the airlines claw to get back to profitability. In April, Southwest was the first U.S. airline to report a profit since the pandemic hit, and Delta followed last week — in both cases, profits were possible only because of money from taxpayers.United’s shares rose 6.6% in regular trading Tuesday as travel stocks rebounded from large losses on Monday. In extended trading after the results were released, the shares slipped less than 1%.More than 2 million people a day have boarded planes in the U.S. this month, nearly the double the number that were flying back in March.The recovery, however, is very fragile. Travel is still down 20% from pre-pandemic July 2019. High-fare corporate and international flyers, who contribute an oversized portion of United’s revenue, are still mostly absent — United filled 83% of seats on domestic flights but only 53% on international ones.United recently told investors about plans to build its U.S. operation, “but the company is still dependent on international routes to make a full profit recovery,” said Peter McNally, an analyst with Third Bridge Group in New York.United’s second-quarter loss would have been far worse — $1.3 billion — without more than $1 billion in federal pandemic aid, which was partly offset by one-time charges. The airline was also hit by higher expenses for jet fuel.Still, the loss was much smaller than the $1.63 billion United lost a year earlier and the $1.36 billion loss it suffered in the first quarter of this year.Excluding the federal payroll aid and other items, Chicago-based United Airlines Holdings Inc. said its adjusted loss worked out to $3.91 per share. That was slightly better than the $4.01 per share loss forecast by analysts in a FactSet survey.Revenue rose from a year ago to $5.47 billion, beating Wall Street’s prediction of $5.34 billion.The company declined to make executives available to discuss the results. It scheduled a call with analysts and reporters for Wednesday.In the April-June period, United operated barely more than half the schedule it offered in the same three months of 2019, but it plans to add flights in the third quarter and run 74% of its pre-pandemic operation.Last month, United signaled its confidence in the recovery by placing its largest-ever order for new jets — 270 from Boeing and Airbus — to replace aging planes and allow for growth after the pandemic.

United Airlines posts $434 million 2Q loss but revenue up

United Airlines is reporting a loss of $434 million in the April-through-June quarter but says it will start turning a profit soonBy DAVID KOENIG AP Airlines WriterJuly 20, 2021, 9:11 PM• 3 min readShare to FacebookShare to TwitterEmail this articleUnited Airlines reduced its quarterly loss to $434 million and posted surprisingly strong revenue as U.S. vacation travel picked up.In reporting its second-quarter results Tuesday, the Chicago-based airline said it expects to earn a pretax profit in the remaining two quarters of the year. That would break a string of six-straight money-losing quarters since the pandemic began to crush air travel.United’s shares rose 6.6% in regular trading Tuesday as travel stocks rebounded from large losses on Monday. In extended trading after the results were released, the shares slipped about 0.5%.More than 2 million people a day have boarded planes in the U.S. this month, nearly the double the number that were flying back in March.The recovery, however, is very fragile. Travel is still down 20% from pre-pandemic July 2019. High-fare corporate and international flyers, who contribute an oversized portion of United’s revenue, are still mostly absent — United filled 83% of seats on domestic flights but only 53% on international ones.United’s second-quarter loss would have been far worse — $1.3 billion — without more than $1 billion in federal pandemic aid, which was partly offset by one-time charges. The airline was also hit by higher expenses for jet fuel.Still, the loss was much smaller than the $1.63 billion United lost a year earlier and the $1.36 billion loss it suffered in the first quarter of this year.Excluding the federal payroll aid and other items, Chicago-based United Airlines Holdings Inc. said its adjusted loss worked out to $3.91 per share. That was slightly better than the $4.01 per share loss forecast by analysts in a FactSet survey.Revenue rose from a year ago to $5.47 billion, beating Wall Street’s prediction of $5.34 billion.The company declined to make executives available to discuss the results. It scheduled a call with analysts and reporters for Wednesday.In the April-June period, United operated barely more than half the schedule it offered in the same three months of 2019, but it plans to add flights in the third quarter and run 74% of its pre-pandemic operation.Last month, United signaled its confidence in the recovery by placing its largest-ever order for new jets — 270 from Boeing and Airbus — to replace aging planes and allow for growth after the pandemic.

Biden comment hints at boosting travel between US and Europe

Biden comment hints at boosting travel between US and Europe

A seemingly offhand remark by President Joe Biden is raising hopes in the airline industry that the U.S. might soon open up to European visitorsBy DAVID KOENIG AP Airlines WriterJuly 16, 2021, 10:29 PM• 3 min readShare to FacebookShare to TwitterEmail this articleA comment by President Joe Biden is encouraging airlines to hope that travel between the United States and Europe could be expanded in time for last-minute, late-summer vacation trips.At a news conference with German Chancellor Angela Merkel, Biden was asked about ending restrictions that bar most European visitors from entering the United States.Biden said Thursday that a team that is advising him on the pandemic “brought that subject up. It’s in the process of (considering) how soon we can lift the ban … and I will be able to answer that question to you within the next several days.”An official with the U.S. Travel Association, a trade group for the broader tourism industry, praised Biden’s comments.“The science says we can safely reopen international travel now, particularly for countries that have made considerable progress toward vaccinating their citizens,” said Tori Emerson Barnes, the travel group’s executive vice president of policy, citing studies that concluded there is a low risk of transmitting the virus during flights. “Each day that outdated restrictions on travel exist wreaks economic damage on our nation.”Airlines for America, a trade group representing major U.S. carriers, said “the time for action is now” to reopen to international visitors. The group noted that the U.S. allows travel to and from Mexico, where less than one-third of the population is vaccinated, while severely restricting travel from Canada and the United Kingdom, two countries with relatively high vaccination rates.The rise and prevalence of COVID-19 variants in Europe, especially the delta mutation that is also spreading throughout the U.S., has caused the Biden administration to tread slowly about increasing transatlantic travel.Last month, Secretary of State Antony Blinken said the administration was anxious to restore travel “as fully and quickly as possible,” but said he couldn’t put a date on reopening the country. “We have to be guided by the science, by medical expertise.”Most of continental Europe has relaxed restrictions on Americans who are fully vaccinated, although the United Kingdom still requires quarantines for most visitors arriving from the U.S. Airlines say, however, that the lack of two-way travel is limiting the number of flights they can offer and seats they can sell.In recent months, U.S. airlines have started new service to European countries that are open to American visitors. Delta launched new or resumed service to Greece, Iceland and Croatia, which opened early to vaccinated foreigners. In some cases, Americans who tested negative for the virus were able to skip quarantine requirements that were in place for other visitors.Delta Air Lines CEO Ed Bastian said this week that bookings by Americans surged when those countries reopened and others followed.“The problem is, there are only Americans that we are carrying in (to Europe) and carrying out,” Bastian told The Associated Press.With most Europeans unable to enter the U.S., Delta has been forced to keep its transatlantic capacity at around half the level it was before the pandemic, he said.———David Koenig can be reached at www.twitter.com/airlinewriter

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