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Airlines Get a Boost as U.S. Lifts COVID-19-Test Requirement
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The Biden administration has dropped its COVID-testing requirement for inbound vaccinated international travelers, effective Jun 12, 12:01 a.m. The move follows pressure from airlines and the travel industry that have blamed testing requirements for suppressed international travel recovery.
The lifting of this last pandemic-related travel restriction (the rule has been in place since January 2021), just in time for the peak summer travel period, is expected to boost traffic for U.S. airlines, including Delta Air Lines (DAL - Free Report) , American Airlines (AAL - Free Report) , United Airlines (UAL - Free Report) and Southwest Airlines (LUV - Free Report) .
While the Centers for Disease Control and Prevention (“CDC”) does not find testing requirements necessary as of now, it will re-evaluate its decision after three months and if need be, will reimpose the same.
The CDC, however, recommends that travelers boarding a flight to the United States get tested for any infection no more than three days prior to departure and avoid traveling in case of sickness.
In a statement, Airlines for America president and CEO, Nicholas E. Calio, said, “Lifting this policy will help encourage and restore air travel to the United States, benefiting communities across the country that rely heavily on travel and tourism to support their local economies.”
In a statement, Delta said that it is “prepared to welcome international travelers to the United States this summer” following the lifting of pre-travel testing requirements for international visitors to the United States.
American Airlines said, “With the widespread availability of effective treatment options and vaccines, we believe this is the right time for this decision. We are eager to see more of our customers return to international travel.”
While domestic air-travel demand has nearly reached pre-pandemic levels, international travel is still lagging. The lifting of this pre-departure testing requirement for international visitors is expected to boost business as well as leisure international travel demand.
With upbeat travel demand, primarily on the domestic front, American Airlines recently improved its expectations for the second quarter of 2022. The carrier expects revenues to rise 11-13% from the second-quarter 2019 actuals (earlier expectation was an increase in the 6- 8% range). Total revenue per available seat miles (TRASM: a measure of unit revenue) is now anticipated to be 20-22%, higher than the second-quarter 2019 reading (earlier estimate was a 14-16% rise).
Driven by upbeat demand, American Airlines expects pre-tax margin, excluding net special items, in the 4-6% range compared with the 3-5% band expected earlier.
As air-travel demand continues to rebound, Delta now expects June quarter's adjusted total revenues to be fully restored to the 2019 level. Previously, the airline had expected the same to have recovered 93-97% from the 2019 level.
Delta now anticipates total unit revenues to increase seven to eight points from what it had initially expected. The upside is due to higher travel demand and pricing.
Southwest, sporting a Zacks Rank #1 (Strong Buy), has been seeing continued increase in bookings for the summer and a strong load factor (percentage of seats filled by passengers), owing to which it raised its second-quarter projections. For the second quarter, LUV now expects operating revenues to increase 12-15% from the comparable period in 2019. Previously, the company had expected the same to rise 8-12%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Southwest anticipates capacity, measured in available seat miles (ASMs), to decline 7% in the second quarter. The company expects cost per available seat mile (CASM), excluding fuel, to increase 14-18% in the current quarter from the comparable period in 2019.
United Airlines also improved its projections for the second quarter. UAL expects total revenue per available seat miles (TRASM: a measure of unit revenues) for second-quarter 2022 to increase in the 23-25% band from the second-quarter 2019 actuals. Per the previous forecast, provided while releasing first-quarter 2022 results, the metric was expected to increase roughly 17% from the second-quarter 2019 actuals.
United Airlines anticipates capacity to decline roughly 14% in the current quarter from the second-quarter 2019 levels (the earlier forecast had predicted a contraction of roughly 13%).
Wrapping Up
As coronavirus fears fade and travel restrictions ease, airlines are seeing continued improvement in air-travel demand, especially on the domestic front. The lifting of this last major travel restriction by the United States is expected to accelerate international travel recovery and pave the way for a full rebound in airlines. Despite rising ticket prices, thanks to the spike in fuel prices, consumer demand has remained unhampered.
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Airlines Get a Boost as U.S. Lifts COVID-19-Test Requirement
The Biden administration has dropped its COVID-testing requirement for inbound vaccinated international travelers, effective Jun 12, 12:01 a.m. The move follows pressure from airlines and the travel industry that have blamed testing requirements for suppressed international travel recovery.
The lifting of this last pandemic-related travel restriction (the rule has been in place since January 2021), just in time for the peak summer travel period, is expected to boost traffic for U.S. airlines, including Delta Air Lines (DAL - Free Report) , American Airlines (AAL - Free Report) , United Airlines (UAL - Free Report) and Southwest Airlines (LUV - Free Report) .
While the Centers for Disease Control and Prevention (“CDC”) does not find testing requirements necessary as of now, it will re-evaluate its decision after three months and if need be, will reimpose the same.
The CDC, however, recommends that travelers boarding a flight to the United States get tested for any infection no more than three days prior to departure and avoid traveling in case of sickness.
In a statement, Airlines for America president and CEO, Nicholas E. Calio, said, “Lifting this policy will help encourage and restore air travel to the United States, benefiting communities across the country that rely heavily on travel and tourism to support their local economies.”
In a statement, Delta said that it is “prepared to welcome international travelers to the United States this summer” following the lifting of pre-travel testing requirements for international visitors to the United States.
American Airlines said, “With the widespread availability of effective treatment options and vaccines, we believe this is the right time for this decision. We are eager to see more of our customers return to international travel.”
While domestic air-travel demand has nearly reached pre-pandemic levels, international travel is still lagging. The lifting of this pre-departure testing requirement for international visitors is expected to boost business as well as leisure international travel demand.
With upbeat travel demand, primarily on the domestic front, American Airlines recently improved its expectations for the second quarter of 2022. The carrier expects revenues to rise 11-13% from the second-quarter 2019 actuals (earlier expectation was an increase in the 6- 8% range). Total revenue per available seat miles (TRASM: a measure of unit revenue) is now anticipated to be 20-22%, higher than the second-quarter 2019 reading (earlier estimate was a 14-16% rise).
Driven by upbeat demand, American Airlines expects pre-tax margin, excluding net special items, in the 4-6% range compared with the 3-5% band expected earlier.
As air-travel demand continues to rebound, Delta now expects June quarter's adjusted total revenues to be fully restored to the 2019 level. Previously, the airline had expected the same to have recovered 93-97% from the 2019 level.
Delta now anticipates total unit revenues to increase seven to eight points from what it had initially expected. The upside is due to higher travel demand and pricing.
Southwest, sporting a Zacks Rank #1 (Strong Buy), has been seeing continued increase in bookings for the summer and a strong load factor (percentage of seats filled by passengers), owing to which it raised its second-quarter projections. For the second quarter, LUV now expects operating revenues to increase 12-15% from the comparable period in 2019. Previously, the company had expected the same to rise 8-12%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Southwest anticipates capacity, measured in available seat miles (ASMs), to decline 7% in the second quarter. The company expects cost per available seat mile (CASM), excluding fuel, to increase 14-18% in the current quarter from the comparable period in 2019.
United Airlines also improved its projections for the second quarter. UAL expects total revenue per available seat miles (TRASM: a measure of unit revenues) for second-quarter 2022 to increase in the 23-25% band from the second-quarter 2019 actuals. Per the previous forecast, provided while releasing first-quarter 2022 results, the metric was expected to increase roughly 17% from the second-quarter 2019 actuals.
United Airlines anticipates capacity to decline roughly 14% in the current quarter from the second-quarter 2019 levels (the earlier forecast had predicted a contraction of roughly 13%).
Wrapping Up
As coronavirus fears fade and travel restrictions ease, airlines are seeing continued improvement in air-travel demand, especially on the domestic front. The lifting of this last major travel restriction by the United States is expected to accelerate international travel recovery and pave the way for a full rebound in airlines. Despite rising ticket prices, thanks to the spike in fuel prices, consumer demand has remained unhampered.