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'Bookings are recovering quickly': American, United play waiting game as omicron leads to new losses

Jan. 20, 2022
4 min read
American Airlines jets at the gate in Dallas
'Bookings are recovering quickly': American, United play waiting game as omicron leads to new losses
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American Airlines and United Airlines both posted steep losses for the fourth quarter of 2021, and, like Delta, expect the impact to persist into this year.

But also like Delta, both airlines expect to see the demand recovery pick back up where it left off before a surge of new COVID-19 cases, driven by the new omicron variant, spread across the U.S. and the world.

Executives from both airlines, which held their quarterly earnings conference calls with investors on Thursday, expressed optimism.

"Omicron is impacting near-term demand," United CEO Scott Kirby said during the call. "But bookings continue to be strong from March and beyond."

"This latest variant has caused a delay in the expected recovery and is having an impact on bookings in the first quarter," airline president Brett Hart added. "However, we remain confident that travel will rebound quickly. As cases subside, we expect a strong summer and second half of 2022, consistent with our expectations pre-omicron."

United posted a net loss of $646 million for the fourth quarter on $8.19 billion of revenue. American lost $931 million on $9.43 billion of revenue. For context, the airlines lost $1.9 billion and $2.2 billion, respectively, in the same quarter in 2020.

"Our results for 2021 were significantly improved over 2020, but the impact of the omicron variant has affected the timing of a full revenue recovery," American Airlines president and (and incoming CEO) Robert Isom said. "As we've seen throughout the pandemic, each new variant and corresponding increasing cases is followed by a faster recovery of demand."

"Bookings are recovering quickly after dropping off considerably in early December, though they're still not back to pre-omicron levels. Leisure travel, particularly in the domestic and short-haul international market, remains very strong and is approaching a 100% recovery," he added. "The recovery of international and business travel slowed late in the fourth quarter given the omicron variant, but we remain very bullish on both."

Executives at the airlines noted that now, two years into the pandemic, they're able to forecast demand trends more reliably, which has given them reasons for optimism towards the latter part of the first quarter.

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"The amount of time it takes from cases peaking to demand recovering, that's shortened through every wave," American's chief revenue officer Vasu Raja said. "If you presume last week was the peak of cases across the country, we've been encouraged by the last few days of bookings."

Executives at both airlines said they remain optimistic on the return of higher-yielding business travel, particularly as offices eventually reopen.

"We still expect business travel to come back in full, but it'll come back in a different way," Isom said. "The overall mix of business customers, how they travel, and how we serve them."

"Business demand fell sharply in January versus early December," Hart at United said. "Given business demand tends to book closer to the travel, we remain optimistic that we'll see a strong rebound as we progress through the quarter."

United is specifically forecasting that business demand will bounce back to where it was in early December by the end of February.

Notably, Isom added that some leisure demand has come from more of a mixed business-leisure set, potentially taking advantage of the ability to work remotely.

See also: Snapshot: 1 in 13 flights were canceled during the holidays. How US airlines fared

"Customers that we've historically called leisure travelers are actually flying for reasons beyond just vacation," he said. "They may fly to a beach or mountain destination, but they're actually going to work remotely for the week. The lines between leisure and business travel are definitely blurring."

During Delta's earnings call last week, executives noted that the first few weeks of the year are typically slow for business travel anyway, which helps mitigate the impact of the variant.

“These five weeks that it’s impacting are five of the lightest weeks in terms of business travel,” Delta president Glen Hauenstein said, adding that “it’s really impacted more the close-in demand than the further out demand.”

Featured image by (Photo by Robert Alexander/Getty Images)
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

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10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,400+ lounges, including Capital One Lounges and our Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023