Business course

Relaxation of restrictions will boost U.S. airlines, but business travel remains unclear

CHICAGO, Sept.20 (Reuters) – U.S. airlines will benefit on Monday from the Biden administration’s decision to reopen the country to fully vaccinated air travelers from around the world, experts said, but the prospects for lucrative business travel were less certain.

Lifting the restrictions will allow tens of thousands of foreign nationals to travel to the United States. It also gives the big three airlines, American Airlines (AAL.O), United Airlines (UAL.O) and Delta Air Lines (DAL.N), a chance to recover some of their transatlantic business.

Moody’s Investors Service estimates that the White House decision would result in “stronger” operating cash flow for US airlines over the next six months.

Transatlantic flights accounted for 11-17% of their passenger revenue in 2019. Overall, international travel generated 26-38% of the three airlines’ revenue in 2019, said Colin Scarola, vice president of research. on equities at CFRA Research.

Scarola added “the international category was the one that really didn’t recover much at all”.

The lifting of restrictions coincides with the start of the winter season, historically a slack period for international travel. Scarola said the move would encourage companies to approve overseas business travel, but the fight against COVID-19 was more important and he doesn’t expect international travel to bounce back to the level before pandemic before the end of 2022.

CEO Doug Parker said American Airlines was “looking forward to welcoming more customers for easy and smooth international travel for business, pleasure, and reconnecting with family and friends.”

In early September, passenger volumes for U.S. airlines for international travel were only 44% of pre-pandemic levels, according to data from Airlines for America, an industry trade group.

Raymond James analyst Savanthi Syth called the White House move a “progressive positive” that would give US carriers clarity for next year’s summer travel season. Still, that hasn’t prompted her to revise her financial estimates or the outlook for air travel.

“While this is a net positive, you kind of have to balance it out with what’s going on in the United States,” she said, referring to airline warnings this month. regarding the financial blow to the rapidly spreading Delta variant of the coronavirus.

Several airlines have cut their revenue forecasts, citing a slowdown in bookings and an increase in cancellations. read more The resurgence of cases has also stalled a resumption of business travel, a cash cow for airlines with a round-trip business class ticket for a Chicago-New York United flight nearly triple the price of the economy class.

Syth expects domestic business travel to remain below 2019 levels at least until the end of 2022. International business travel is not expected to resume until 2024, she said.

Additional reporting by David Shepardson in Washington; Editing by David Gregorio and Chris Sanders

Our standards: Thomson Reuters Trust Principles.


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