Back to top

Image: Shutterstock

Can Holiday Season Help Airlines Bounce Back From Its Lows?

Read MoreHide Full Article

The Omicron variant of the coronavirus has raised fresh fears in people's minds, but that didn’t stop Americans from cutting down on flying during the Thanksgiving weekend. In fact, air traffic set a pandemic record in Thanksgiving week.

This should bring a smile on the faces of airline companies that have been struggling to get back on their feet ever since the pandemic started. Almost all major American airlines like American Airlines (AAL - Free Report) ), Southwest Airlines (LUV - Free Report) , United Airlines (UAL - Free Report) and Delta Air Lines (DAL - Free Report) saw passengers soaring to pandemic-level highs in Thanksgiving week.

Air Traffic Soars to Pandemic-Level High

Airlines have been banking on the holiday season for traffic to bounce back and as expected, it started well with Thanksgiving. According to the Transportation Security Administration (“TSA”), around 2.5 million people traveled on Nov 28, the highest since Feb 15, 2020, following which the pandemic struck.

Although the figureis almost 15% lower than what the TSA screened two years back, it is a pandemic-level high. From Nov22 through Nov 28, around 14.4 million people were screened by the TSA. This is more than double the 6.4 million people screened during this period last year.

As expected by most of the major American carriers,Thanksgiving travel soared. American Airlines flew 1,500 flights more than other airlines during the Thanksgiving week. Besides, flight attendants and staff of AAL also received extra pay or bonuses for working during the holiday period and meeting attendance goals.

American Airlines didn’t face any major issue during this period except for 56 cancellations and some delays. AAL flew a total of 5.6 million people from Nov 19 through Nov 28.

Southwest Airlines, too,expected a surge in air travel during the Thanksgiving week, although it hadn’t given any specific figures beforehand. Much like AAL, LUV also doled out bonuses and extra pay to its flight attendants and staff during this people. The Columbus Day weekend had cost Southwest Airlines $75 million in bottom line after it had to cancel as many as 2,000 flights. However, LUV avoided this with extra pay and bonus on Thanksgiving week.

United Airlines had earlier said that it expected to fly 4.5 million passengers from Nov 19 through Nov 30. This was almost 88% higher than what UAL had flown last year during the same period. United Airlines also added 700 more flights to its daily schedule inThanksgiving week.

Delta Airlines, which, too, has been struggling for a while, saw trafficrebounding duringThanksgiving week. DAL had earlier projected to fly 5.6 million customers during this period. Although Delta Airlines hasn’t given the exact number of passengers it flew, it is expected to outpace its 2020 numbers by a huge margin.

Airlines Fighting Back

The pandemic had left the airline industry battered as traveling almost came to a standstill in March-April last year. Although travel resumed as the economy started reopening, airline companies continued to face challenges.

However, things started changing after millions got the COVID-19 vaccine and the government lifted restrictions on travel. This saw people making holiday plans.

However, news of thedeadly Omicron variant of coronavirus has already started raising fears in the minds of people, which might again be a cause of concern. Airline companies, however, are still hopeful.

Delta Airlines and United Airlines are the two U.S. carriers that have non-stop service to South Africa, where the virus was detected. Neither Delta nor United Airlines is canceling their flights. Airlines for America, a lobbyist for major U.S. carriers like DAL, AAL, LUV and UAL, said it is in touch with the government about the situation. DAL, AAL, LUV and UAL each carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moreover, the holiday season has just begun and that too on a high note. With Christmas and New Year still left, traveling is likely to soar in the coming days too.