Airlines Almost Profitable Again as Bookings Soar

Airplane flying over Atlanta, Georgia, USA.
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Aviation leaders are expressing excitement that with COVID-19 vaccinations speeding up, the industry may recover sooner rather than later. Executives from American Airlines, Delta Air Lines, JetBlue and United Airlines all shared their revised outlooks for the year at the 2021 J.P. Morgan Industrials Conference.

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Cash Burn Could End in March as Pent-Up Demand for Travel Comes to Fruition

In turn, the executives note that preliminary booking numbers for March 2020 suggest that the recovery may be coming sooner than expected. Several airlines noted that because of an increase in ticket sales, burn rate may reach zero by the end of the month.

“United expects our core cash burn to be positive in March,” United chief executive Scott Kirby told the conference, as quoted by a Seeking Alpha transcript. “And assuming the current bookings trajectory continues, we’d also expect core cash burn to be positive going forward.”

“I continue to be cautiously optimistic that we will see the traction where we’re saying here, we’re going to hold it,” said Ed Bastian, CEO of Delta Airlines, according to a Seeking Alpha transcript. “And then, as the recovery continues to take shape, gain strength into the summer, with the return to profitability for Delta, hopefully in the third quarter.”

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Data from the U.S. Centers for Disease Control show 21% of the U.S. population has received at least one dose of the COVID-19 vaccine, with over 38 million people being fully vaccinated. As vaccination campaigns continue to gain momentum, the leaders say they are starting to see bookings trending upwards towards pre-pandemic levels.

“What we’re seeing is certainly in the last few weeks a real uptick in bookings,” says Doug Parker, CEO of American Airlines, as quoted in a Seeking Alpha transcript. “Our last three weeks have been the best three weeks since the pandemic hit, and each week has been better than the prior one.”

Leading the bookings are leisure travelers who have plans of visiting friends and relatives or simply going on vacation once they are fully vaccinated against the novel coronavirus. In turn, airlines are looking to schedule more flights, operate more aircraft and leverage partnerships to support the demand.

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“So part of our reconnecting with customers, making sure we can fly where they need to fly, our team has not stood still during this crisis,” said Parker, referencing their airline’s alliances with Alaska Airlines, JetBlue and South American carrier GOL. “[The partnerships] just make the American Airlines network…that much stronger for our customers and something that I think is going to make a big difference as we move forward in terms of our ability to compete with anyone in the world.”

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Airline Stocks Soar on Positive News

The first good news for the aviation industry in over a year gave airline shares a tailwind, contributing to the Dow Jones Industrial Average hitting its highest close this year. As of closing on Monday, March 15, 2021, United Airlines (NASDAQ: UAL)  closed up 8.26%, American (NASDAQ: AAL) rose by 7.7% and Delta (NYSE: DAL) jumped by 2.33%.

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About the Author

Joe Cortez is a personal finance writer for GoBankingRates. With over a decade of experience in financial journalism, Joe brings an insider knowledge of all things consumer finance, including credit cards, mortgages, and banking accounts. His work has appeared at NerdWallet, Business Insider and NextAdvisor. He is a member of the Society for Professional Journalists, National Association of Hispanic Journalists, and the Radio-Television-Digital News Association.
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