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Southwest Airlines Co. (LUV) - free report >>
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Southwest Airlines Co. (LUV) - free report >>
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American Airlines' (AAL) August Revenues Hit by COVID-19 Spike
American Airlines Group (AAL - Free Report) is the latest carrier to warn about softness in bookings amid resurgence in coronavirus cases in the United States caused by the highly contagious Delta variant. Per a USA Today article, which shows Johns Hopkins University data, United States currently has more than 38 million confirmed cases of COVID-19, while the death tally stands at 632,000.
A CNBC report stated that American Airlines’ August revenues are falling below its expectations due to fresh spike in coronavirus cases.
Amid the prevalent pandemic, American Airlines’ chief revenue officer, Vasu Raja, said, “This has been and we expect will continue to be a very choppy recovery”, at the Raymond James investor conference.
American Airlines Group Inc. Price
American Airlines Group Inc. price | American Airlines Group Inc. Quote
While the company’s July revenues were above its expectations, rise in COVID-19 cases has weakened near-term bookings and led to increased cancellations in August. However, the carrier’s end-of-year holiday bookings have been strong.
Due to “the fluidity of the current demand environment”, the airline does not plan to make adjustments to its capacity or revise its guidance at the moment.
On business travel recovery, Raja said that demand is expected to recover, albeit at a slower pace than what was previously experienced.
Last week, Spirit Airlines said that it was witnessing uptick in cancellations and softer-than-expected booking trends for the third quarter due to increase in coronavirus cases. The company estimates an impact of $80-$100 million on revenues in the third quarter as a result of this weakness.
In a SEC filing dated Aug 11, Southwest Airlines (LUV - Free Report) revealed that it had “experienced a deceleration in close-in bookings and an increase in close-in trip cancellations” in August, apparently due to rise in coronavirus cases induced by the Delta variant. As a result, the carrier slashed its third-quarter operating revenue guidance and said that it was doubtful about being profitable in third-quarter 2021 as it had previously expected.
Each of the stocks mentioned above carries a Zacks Rank #3 (Hold).
A Key Pick
A better-ranked stock in the airline space is SkyWest (SKYW - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Shares of SkyWest have gained more than 40% in a year’s time.