The aviation space had a much better run in 2021 compared with the coronavirus-ravaged scenario in 2020. However, despite this improvement, the airlines seem on the backfoot with a slew of flight cancellations in the last few days of the current year, which is about to end.
What is more damaging is that a plethora of flights cancelled by the likes of
Delta Air Lines ( DAL Quick Quote DAL - Free Report) , United Airlines ( UAL Quick Quote UAL - Free Report) and JetBlue Airways ( JBLU Quick Quote JBLU - Free Report) hurt the holiday travel plans of many in the United States.
Let’s delve deep into this latest setback for the airline stocks.
Omicron-induced staff crunch and weather woes prompted the U.S. carriers to call off multiple flights, thereby hampering travel plans of many passengers, particularly over the Christmas holiday weekend. Evidently, United Airlines canceled more than 100 Christmas Eve flights amid a spike in the coronavirus cases induced by the Omicron variant.
Bryan Quigley, United Airlines’ senior vice president of flight operations,
reportedly wrote in a message, “Our current pilot Covid-19 case count is on the rise.” Quigley added, “Pilots who have developed symptoms are also in quarantine and we have a high number of pilots on the sick list.” United Airlines is continuously looking to rebook as many affected passengers as possible.
Delta also cancelled multiple flights over the Christmas holiday weekend. This issue was just not limited to Delta and United Airlines. Evidently, U.S. airlines cancelled several flights (more than 800) over the Christmas weekend with its crew being laid low by omicron.
The flight cancellation spree has continued even after Christmas. For example, Delta had to cancel roughly 250 of 4,179 scheduled mainline and Delta Connection flights yesterday. Management said that it is rebooking customers affected by the cancellations on the next available itinerary to their final destination. DAL expects to cancel between 200 and 300 flights (including both Delta mainline and Delta Connection operated flights) over the new year weekend. The severity of this situation can be gauged from the alarming figures furnished by the U.S. airlines, which cancelled more than 1,000 flights on Dec 30.
Low-cost carrier JetBlue also had to call off many flights over the past week due to the omicron-led staff crisis. On Dec 30, JBLU announced the removal of roughly 1,300 flights from its schedule through the middle of January. The removed flights
reportedly will affect 10% of JBLU’s schedule.
A JetBlue spokesman was quoted saying, "We expect the number of COVID cases in the northeast – where most of our crew members are based – to continue to surge for the next week or two."
Amid this omicron-induced mass cancellations, the Centers for Disease Control and Prevention’s decision to reduce the recommended isolation period for the Americans (infected with COVID-19 but are asymptomatic) to five days from 10 brought some cheer to the airlines, as this is likely to go a long way in tackling the issue of insufficient staffing.
CDC also stated that asymptomatic patients should wear a mask (when around others) for five more days after leaving the isolation zone. Welcoming this move, JetBlue management hoped that the new requirements will help bring sick staff back faster.
The reduced traffic due to the omicron strain and foul weather-induced flight cancellations is likely to limit top-line growth of the airlines in the December quarter. Delta, currently carrying a Zacks Rank #3 (Hold), will kickstart the fourth-quarter earnings season for airlines on Jan 13.
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