Airlines were finally starting to see passengers return. Then coronavirus cases spiked
President Trump says he'll resume coronavirus briefings at the White House amid the recent spike in cases. USA TODAY
Airlines started July with a bang as holiday travelers hit the skies in relatively strong numbers, but the outlook for the rest of the summer and fall has since fizzled and talk has turned from adding flights to cutting them once again.
The culprit: A surge in new coronavirus cases in the South and Southwest and resulting travel restrictions, along with moves to close or restrict recently reopened businesses including restaurants and bars.
Executives from Southwest, American, Spirit and Alaska airlines detailed the sudden falloff in already shrunken travel demand in a series of quarterly earnings conference calls Thursday, echoing recent reports from United and Delta.
"In short, the crisis continues,'' American CEO Doug Parker said.
American, which has been more aggressive than most of its competitors in adding flights back for summer vacation season, filled 45% of its seats in May and nearly two-thirds of its seats in June as coronavirus cases eased and more states reopened their economies, Parker said. That compares with 15% in April.
This month, bookings are down "markedly'' as travelers opt not to travel due to quarantines and closed businesses, the airline says. Net bookings are currently down 75% to 85% from a year ago, compared with year-over-year declines of 35% to 40% in some Sun Belt markets after they reopened. Net bookings are new bookings minus trip cancellations.
"This is less about people's concern about flying and much more about having a reason to travel,'' Parker said.
In response to weakening demand, American plans to cut back August and September flights.
Southwest Airlines CEO Gary Kelly said the "unexpected'' jump in coronavirus cases this month and resulting fall off in business has forced Southwest to start adjusting its flight schedules for August and September.
"We've seen a dramatic impact to our trends, as far as traffic, revenue and bookings,'' he said on the airline's earnings conference call Thursday.
The financial impact: "hundreds of millions of dollars'' in revenue for the third quarter, which runs from July through September.
"We knew this would be a long, saw-toothed slog with a lot of unexpected twists and turns, and its proving to be so,'' Kelly said. ''Our country and the world needs to beat this virus. Until then, we're going to have to be resilient. We're going to have to persevere and we're going to have to manage.''
Spirit Airlines, the budget carrier that was among the first airlines to see an uptick in demand and promptly added summer flights, isn't immune from the latest hit to bookings.
"We've seen another setback in demand,'' CEO Ted Christie told Wall Street analysts and reporters Thursday. "We expect the rest of the summer to remain challenging for us and the industry.''
Spirit says it will offer fewer flights this fall and is evaluating its schedule for the (usually) busy holiday travel period.
Alaska Airlines CEO Brad Tilden said the Seattle-based carrier, which is strong on the West Coast, was on "really nice clip'' through the July 4th holiday weekend.
"It seemed like every day there were 1,000 customers more than the previous day,'' he said.
Then came the barrage of news about a spike in coronavirus cases and bookings started to soften, he said.
"That's the thing that's making us nervous about August and September,'' Tilden said.
"The environment is quite a bit different than it was 30 days ago.''