DALLAS — Airlines are piling up billions of dollars in additional losses as the pandemic chokes off air travel, but a recent uptick in passengers, however modest, has provided some hope.
American Airlines on Thursday reported a loss of $2.4 billion and Southwest Airlines lost $1.16 billion in the third quarter, typically a very strong period of air travel that includes most of the summer vacation season. Revenue plunged at both airlines.
Combined with earlier losses reported by Delta and United, the four largest US airlines have lost at least $10 billion in each of the last two quarters. It’s an unprecedented nosedive that has caused the once highly profitable airlines to forage for billions of dollars in government aid and private borrowing to hang on until more travelers return.
The airlines, however, are offering upbeat forecasts about Thanksgiving and Christmas travel, even as many states report an increase in confirmed virus cases. Southwest feels confident enough that it will stop blocking middle seats on its planes Dec. 1.
Southwest and Delta are among a handful of airlines still limiting capacity to reassure passengers who are nervous about packed planes during a pandemic. Southwest said it will drop that policy because of “science-based findings from trusted medical and aviation organizations” about how COVID-19 is spread. Airline groups and aircraft manufacturers, relying in part on research by the military, say that strong cabin air flow and high-efficiency filters make planes safer than other indoor settings.
There is a financial angle too, as flights become more full. Southwest said it turned away $20 million in ticket sales in September and estimated it could lose $40 million in November. Delta plans to stop blocking seats in the first half of next year. American and United have long tried to fill every seat.
Southwest President Tom Nealon said that a recent increase in confirmed COVID-19 cases doesn’t seem to be hurting holiday bookings. That’s a sharp contrast to July, when a spike in the virus across the Sun Belt choked off a rise in travel.
“Perhaps because you’re not seeing as many hospitalizations and deaths, although both are rising right now, I get that,” Nealon said. “But perhaps people haven’t been as concerned about it as they were in the past.”
Officials at many airlines believe travel won’t fully return until the pandemic is under control and a vaccine is widely available. That could mean many more months of depressed revenue for the airlines.
Southwest CEO Gary Kelly on Thursday urged Washington to approve more pandemic relief, including a six-month extension of $25 billion in aid to airlines. Without it, he said, his airline can’t afford to maintain jobs and full pay.
Southwest plans to cut pay for nonunion workers by 10% in January and has demanded unions accept lower pay or risk furloughs.
Air travel in the US has recovered slowly in recent months, topping 1 million daily passengers on Sunday for the first time since March. However, air travel in October is still down 65% from a year ago. Business travelers, who fly more often and pay higher fares, are still mostly absent.