American Airlines: Delta Variant Concerns Dropped August Revenue

American Airlines said on Wednesday that the delta variant and the surge in COVID cases affected their August revenue. According to Vasu Raja, American Airlines’ chief revenue officer, “This has been and we expect will continue to be a very choppy recovery.

August revenue is quite the opposite of American’s performance last month. July revenue surpassed the airline’s expectations. American’s August performance has weaker near-term bookings, plus more cancellations. But on the bright side, the end-of-year holiday bookings have been strong.

Lower August Revenue

American Airlines isn’t the only airline to suffer from a weaker August performance. Southwest Airlines, Frontier Airlines, and Spirit Airlines all suffered lower bookings for August as COVID cases are on the rise. Raja said that “Given the fluidity of the current demand environment we are not ready to make definitive adjustments to our capacity plans or guides at this point in time”.

On Tuesday, the Transportation Security Administration screened 1.47 million passengers on US airports. That’s a significant number since it’s the lowest since May 25.

Based on past years, travel demand tends to slide later in August at the tail end of the vacation season. Also, business travel usually picks up by fall. However, things are a bit tricky since companies have successfully transitioned towards work-from-home setups. This raises the question of how quickly is business travel going to recover?

Raja said that “We do anticipate that there will be a…slower recovery in business demand than what we’ve seen, but there will still be a recovery in demand”.

Regaining Traveler Confidence

There are two studies from the Centers for Disease Control and Prevention that discovered COVID19 vaccines are waning in terms of efficacy against the more transmissible Delta variant. This made a lot of passengers hesitate to travel, even for those who are already vaccinated. To regain the confidence of passengers, some airlines are now making COVID19 vaccinations mandatory.