Air travel recovery may come slower than expected, with Southwest Airlines a likely leader

The recent uptick in coronavirus cases in the U.S. has many wondering about the economic impact of the continuing pandemic, especially how it plays out for the travel industry.

For airlines at least, it does not look good. Goldman Sachs now expects the recovery in air travel to take at least an extra year — to 2023 instead of 2022 — to return to 2019 levels, according to the latest update to the firm's COVID-19 recovery forecast on June 28. Domestic travel is still expected to come back first, though that will be led by leisure travelers and not the high-revenue business flyers many carriers depend on.

But the forecast is not all bad. Southwest Airlines, as well as other domestic-focused carriers, are expected to recover earlier and faster than their peers, according to the forecast. The recovery could take longer for the "Big 3" — American Airlines, Delta Air Lines and United Airlines — due to their larger reliance on international and corporate travel.

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"Current traffic trends are below what we had previously forecast… and the resurgence of COVID-19 in some areas of the U.S. adds uncertainty around potential further travel restrictions," wrote Goldman Sachs analyst Catherine O'Brien in the report.

The Goldman Sachs forecast comes as flyer numbers continue to tick slowly up. The Transportation Security Administration (TSA) screened 633,810 people on Sunday, June 28. That is the highest number yet since screenings bottomed out during the worst days of the crisis in April but still less than a quarter of those screened a year ago.

However, airline executives and other Wall Street analysts have warned that the uptick in COVID-19 infections could put a damper on the recovery. A number of states across the south and west are seeing numbers rise rapidly. The Phoenix area, for example, saw more daily cases last week than the New York City area did on its worst days.

Related: Air travel recovery faces new threat as coronavirus cases surge anew

On June 25, Delta CEO Ed Bastian told staff that the carrier's August schedule was "probably going to come down a little bit" due to the spike in cases.

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Atlanta-based Delta is the only U.S. airline that has said they could reduce flights again due to the pandemic, at least so far.

Goldman Sachs pointed to the continued spread of COVID-19 in the U.S. among possible reasons for the slower-than-expected travel recovery. Other countries where the virus has been brought under control faster, for example China, have seen a quicker recovery in domestic travel.

The bank's revised forecast fits with other recovery prognoses. The International Air Transport Association (IATA) does not expect global air travel to return to the levels seen last year until 2024 though certain domestic markets could recover as soon as 2022. While analysts at J.P. Morgan do not expect domestic air travel to recover until 2022 "at the earliest."

Related: State-by-state guide to coronavirus reopening

Southwest is widely viewed as an airline that could quickly recover from the crisis. The airline plans to fly a nearly "full" schedule — or about the same number of flights it flew in 2019 — by the end of the year. This includes adding 11 new routes , but also the elimination of more than 100 nonstop routes that it flew last year.

"As we've seen in past downturns, we've been able to capture substantial demand post the downturn," Southwest commercial chief Andrew Watterson told TPG in May. "We'd expect no different this time."

Other discounters and domestic-focused airlines, including Alaska Airlines, Frontier Airlines and Spirit Airlines, are also expected to recover faster than the industry overall.

Related: Southwest adds 11 new routes, plans to resume a full schedule by year's end

A slower-than-forecast recovery for the Big 3 could have negative implications for their maps and staff. For example, while Delta executives have said that the airline is committed to its coastal hubs and focus cities in Austin (AUS) and Raleigh-Durham (RDU), they do not plan to return to pre-COVID schedules until local demand returns. Hence, a slower recovery for Delta would mean a slower return of many of its routes from these cities.

On the staffing front, American, Delta and United are all evaluating how many staff they will need for the next year. These analyses will determine how many employees will be furloughed or laid off on Oct. 1, the day after protections under the federal government's coronavirus aid package expire.

American has told staff that they anticipate needing 10% to 20% fewer staff than they have today next July, reported Reuters. And Delta is preparing to notify around 2,500 pilots of possible furloughs in the coming weeks.

Despite the revised forecast, Goldman Sachs analysts "remain positive on the industry outlook over the next cycle." They expect U.S. airlines to begin growing again as they come out of the coronavirus downturn.

Related: Delta could furlough more than 2,500 pilots, will downsize flight attendant bases