Airline shares surge as buyers shrug off 1000’s extra flight cancellations

Airline pilots walk over Ronald Reagan Washington National Airport in Arlington, Virginia on December 27, 2021.

Anna Money Maker | Getty Images

Airline investors shrugged thousands of dollars Flight cancellations over the holidays, even if disruptions worsened on Monday.

Airlines scrubbed more than 2,900 U.S. flights on Monday, in addition to more than 5,400 over the weekend, largely due to the severe winter weather that has handicapped some of the country’s busiest airports from Seattle to Washington DC and a spike in Covid -Infections among flight crews. Operations appeared to be improving, however, with 306 flight cancellations scheduled for Tuesday.

Over the holidays, including porters Delta Airlines, United Airlines and JetBlue Airways Said crews were increasingly sick from the rapidly spreading Omicron variant of Covid. The Federal Aviation Administration also warned of delays as their employees increasingly tested positive for the coronavirus.

Delta said it expects to cancel about 200 flights a day out of about 4,000 daily departures on Tuesday and Wednesday.

United, spirit and Alaska are among the airlines that offered their crews additional payment for travel pickup to alleviate the disruption.

From Christmas Eve through Tuesday, airlines have canceled more than 18,700 US flights, according to FlightAware. More than 12% of Saturday’s scheduled flights were canceled when a winter storm hit the Midwest, and nearly 11% of Sunday flights were also scrubbed.

But airline stocks rebounded on Monday, a sign that investors look to the rest of the year when travel demand is expected to rise. American shares rose 4.4% to $ 18.75, United gained 3.9% to close at $ 45.49, and Delta rose 3.1% to end at $ 40.29.

Shares in Southwest Airlines, which canceled hundreds of flights in the past few days, rose 2.7% to end the day at $ 44. The Dallas-based airline canceled another 605 flights, or 16% of its schedule, on Monday, according to FlightAware. Southwest said bad weather had dislocated planes and crews and some employees were unable to work at a regular pace.

“The cancellation of hundreds of flights is disrupting our entire operating system,” the airline said in a statement on Monday. “The storm cleared Denver, for example, but the extreme cold requires additional security protocols for our people working out there, slowing operations, causing delays and forcing some cancellations to keep the whole system moving.”

The cost of the disruptions is not yet clear. Vacation time was critical for airlines, whose executives anticipated some of the busiest days since the pandemic began.

The Omicron variant could pose a “modest, short-term risk” for airlines due to staff quarantines and the potential for some customers to delay travel, Citigroup airline analyst Stephen Trent wrote on Monday.

“Even so, higher vaccination rates and new antiviral treatments are just a few of the factors that could make negative, knee-jerk stock price reactions to the advent of future variants appear increasingly unreasonable,” he wrote.

Delta publishes the sector’s quarterly earnings reports on January 13th.

Extreme climate, omicron infections drive hundreds extra U.S. flight cancellations

Airlines canceled more than 2,600 U.S. flights on New Year’s Day as they faced severe weather conditions across the country and an increase in employee Omicron infections, affecting air travel during the year-end vacation.

The problems are not resolved that quickly. By Saturday afternoon, the airlines had already canceled more than 1,000 US flights planned for Sunday. More than 13,700 U.S. flights have been suspended and thousands more delayed since Christmas Eve, according to flight tracking site FlightAware.

The travel problems occur during the airlines which are among the busiest days since the pandemic began. Last year, the Transportation Security Administration screened nearly 580 million people, up 79% from 2020 but still a decrease of about 30% from pre-pandemic 2019.

Southwest Airlines had largely escaped some of the serious disruptions affecting the rivals over the holidays, but scrubbed 473 flights on Saturday, 13% of the schedule, according to FlightAware. More than 600 more were delayed. Because of a severe winter storm, the airline stopped flight operations at Chicago airports from 1 p.m. local time.

Southwest has more than 200 daily departures from Chicago Midway International Airport. An airline spokeswoman said flights were suspended because planners expected “the gusty winds and snowdrifts that show us decades of operations at this airport will slow down the airspace, de-icing and reloading of planes.” make it very difficult. “The spokeswoman for Southwest had no staffing problems.

The Federal Aviation Administration has also slowed traffic at Dallas Fort Worth International Airport. American Airlines‘largest hub, due to staffing levels. Earlier this week, the agency warned the disruption would continue.

“Weather and heavy seasonal traffic will likely lead to some travel delays in the coming days,” the agency said on Friday. “Like the rest of the US population, an increased number of FAA employees have tested positive for COVID-19. To ensure safety, the volume of traffic in some facilities could be reduced, which can lead to delays in peak times. “

While the weather caused many of the cancellations on New Year’s Day, airlines have included United Airlines, Delta Airlines and JetBlue Airways canceled hundreds of flights over the holidays, citing omicron infections among the crews for many of the disruptions.

Airlines have increased incentives for pilots and flight attendants to take trips and remove staffing bottlenecks that some executives say could last for several weeks as Covid cases continue to rise.

The Air Line Pilots Association, United Pilots’ Union, negotiated triple pay for fliers picking up open travel for most of January, CNBC reported on Friday. United flight attendants and both cabin crew and pilots spirit and others receive bonuses even during the busy holiday season.

Airlines have tried to cancel flights early so customers don’t get stuck at the airport, overwhelm ticket counters and have to change their plans. JetBlue announced this week that it will be 1,280 flights deleted from the flight schedule by mid-January in order to avoid short-term cancellations, as the crews of Omicron Covid infections are on the sidelines.

American, which operates a major hub out of Chicago’s O’Hare International Airport, canceled 208 flights, or 7% of its operations, on Saturday, FlightAware data showed. Chicago-based United has canceled 158.7% of its main-haul flights. Delta has canceled nearly 200 flights, 9% of its Saturday flight schedule.

Airlines executives said they expect travel demand to rise in 2022 and have prepared to expand their schedules and recruit new employees.

Southwest has surpassed its goal of hiring more than 5,700 employees, including onboarding staff and expanded offerings, Greg Muccio, Southwest’s senior director of talent acquisition, wrote in an employee release Thursday. The airline is aiming for another 8,000 more employees next year.

However, the omicron variant is a new challenge for carriers.

“While we expect a full recovery in 2022, it will be a two-half year,” said JetBlue CEO Robin Hayes in an employee New Years Day memo seen by CNBC. “Our traditional lows, especially in the next few weeks after the holidays and as COVID-19 cases rise, are going to be tough.”

However, Hayes said that JetBlue expects an “exceptionally busy summer and plans to take advantage of this opportunity as we continue to expand our fleet and offer low fares on additional routes.”

Omicron drives Christmas weekend flight cancellations above 1,500

Delta Airlines and an American Airlines plane taxi from their gate ahead of the Thanksgiving holiday at Logan International Airport in Boston, Massachusetts, the United States, on November 22, 2021.

Brian Snyder | Reuters

Airlines canceled more than 300 flights on Sunday as disruptions from the Omicron variant of Covid-19 continued to affect crews and staff.

As of Friday, airlines have scrubbed more than 1,500 U.S. flights and cut travel during the busy holiday weekend. United Airlines, Delta Airlines, American Airlines and JetBlue Airways cited the spread of Omicron among crews as the reason for the rejections.

Data from flight tracking site FlightAware showed Delta canceled 5% of its flight schedule, or 131 flights, on Sunday after canceling 310 the day before. United had canceled 95 flights, or 4% of its main flight schedule, up from 240 flights on Saturday. JetBlue canceled 236 flights on Saturday and Sunday.

Airlines said they expected the year-end vacation season to include some of the busiest days since the pandemic began. After staff shortages caused flight disruptions in the past few months, airlines offered crews additional pay to work during the main holiday periods and meet attendance targets.

A JetBlue spokesman said the New York-based airline had entered the holiday season with the highest workforce since the pandemic began.

“As with many companies and organizations, we have seen an increasing number of sick leave from Omicron,” he said in a statement. “Despite our best efforts, we have had to cancel a number of flights and further flight cancellations and other delays remain as the Omicron community continues to expand.”

The airline cut its schedule in advance to avoid last-minute disruption and also assigned managers to the front lines when they are trained, the spokesman added.

Spirit Airlines On Saturday and Sunday together, more than 40 flights were canceled, fewer than other airlines, but it offered flight attendants double pay for picking up trips that weekend, its union said.

U.S. airline executives last week urged the Centers for Disease Control and Prevention to Relax quarantine guidelines for fully vaccinated people who tested positive for Covid, to five days from the current 10, citing potential staff shortages and flight disruptions. the CDC has relaxed its guidelines for medical workers with groundbreaking Covid infections last week.

American Airways jacks up flight attendant vacation pay to keep away from extra flight cancellations

An American airline Airbus A321-200 approaches Washington Ronald Reagan National Airport (DCA) in Arlington, Virginia on February 24, 2021.

Daniel Slim | AFP | Getty Images

American Airlines, shocked by Bulk cancellations last weekend offered flight attendants three times their salary for work-holiday trips, even if they are perfectly staffed by the beginning of January.

The offer comes just days after American canceled hundreds of flights last weekend and earlier this week, many of them related to flight attendant staff shortages. The added incentives show Americans are willing to pay to avoid recurrence.

American said flight attendants and reserve cabin crew members who go on business trips between November 23 and November 29 or December 22 through January 2 will be given one and a half time, according to an internal memo verified by CNBC. If you do not have any absences from November 15 to January 2, you will receive an additional 150% of the remuneration for these main travel times.

“The past few months, and last week in particular, have been challenging,” wrote Brady Byrnes, vice president of flight service to flight attendants.

“With Mother Nature devastating the operations, the myriad policy changes you had to keep up with, and an increase in incidents of customer misconduct, you are dealing with a lot,” added Byrnes, referring to an increase in recalcitrant travelers, including an alleged attack on a flight attendant by a passenger last week.

Airlines spent much of the last year pushing their employees to take vacations or accept takeovers.
When travel demand recovered in late spring and summer, some airlines did not have enough staff to cover routine disruptions such as bad weather. Southwest Airlines offered flight attendants double pay to get more people to pick up their shifts on the weekend of July 4th.

Southwest Airways’ October flight cancellations value provider $75 million

Passengers check in for a Southwest Airlines flight at Orlando International Airport in Orlando, Florida, the United States, on October 11, 2021.

Joe Skipper | Reuters

Southwest Airlines on Thursday said mass flight cancellations and delays that disrupted travel for tens of thousands of customers earlier this month cost $ 75 million.

Southwest based in Dallas more than 2,000 flights canceled between October 8th and October 13th, with Florida bad weather, air traffic control and staff shortages being blamed for the problems.

The hit came from flight cancellations, customer refunds and “gestures of goodwill”.

The airline reported a profit of $ 446 million on Thursday.

“Our active (as opposed to inactive) and available staff fell short of the plan and, along with other factors, caused us to miss our operational performance targets for on-time performance, resulting in additional costs,” said Gary Kelly, CEO of Southwest. That, along with a surge in Covid-19 cases, resulted in a $ 300 million drop in sales, he said.

Here’s how Southwest performed compared to Wall Street expectations in the third quarter, based on Refinitiv average estimates:

  • Adjusted earnings per share: a loss of 23 cents versus an expected loss of 27 cents.
  • Total sales: $ 4.68 billion versus an expected $ 4.58 billion.