Spike in COVID-19 cases is starting to hurt air travel
America's largest domestic airline warned Wednesday that a rising number of COVID-19 cases is starting to hurt its business.
Southwest Airlines "has recently experienced a deceleration in close-in bookings," the company noted in a filing with the Securities and Exchange Commission. Southwest said that was paired with "an increase in close-in trip cancellations in August 2021." The airline blamed the recent rise in COVID-19 cases associated with the delta variant.
If those trends continue, Southwest predicts its revenues will be 3% to 4% lower than what it had told Wall Street just three weeks ago. If the trend continues, Southwest warned that it might not be profitable in the July-to-September quarter, traditionally one of the busiest and most-profitable for airlines.
The news comes a week after budget carrier Frontier Airlines announced that it also was seeing a drop in bookings, something it also tied to the delta variant.
Industry experts had predicted that leisure travel would start to wane in September as schools and offices reopened. Business travel was supposed to start to tick up.
But now that outlook may prove to be too optimistic. Many major companies have pushed back their office reopening plans. And if nobody is in the office, then there is little reason to travel to visit clients.
More: Southwest Airlines CEO says Miami push part of long-term strategy, not 'pandemic play'
While borders are finally reopening for Americans to countries including the United Kingdom and Canada, the timing couldn't be worse with the Centers for Disease Control and Prevention saying that most of the country is experiencing substantial or high levels of COVID-19 community transmission.
Personally, my family on Tuesday decided to cancel our long-planned trip in late August to Aruba following the CDC's announcement Monday adding Aruba, France, French Polynesia, Iceland, Israel and Thailand to its "avoid travel" list. (Sorry Delta Air Lines but we redeposited 276,000 SkyMiles back into my account for those three first-class tickets - I had purposely booked with miles for added flexibility.) We have a six-year-old daughter who isn't vaccinated and felt it wasn't right to travel with her or risk a positive test and being stranded in Aruba, unable to come back to the U.S.
It pains me that we are now back in the mindset of canceling trips again. If you are thinking about doing so, TPG's Benji Stawski has a great guide here about what you need to do if you plan to cancel your vacation.
The team at TPG is going to continue to update you on the impact of the delta variant on travel as well as the latest government advisories.
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