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US carriers have revised their third-quarter revenue and profit expectations due to rising coronavirus infections.
Company forecasts
As suggested by United Airlines, in the third quarter, revenue will fall by 33% compared to 2019, and adjusted pre-tax profit will be negative. Back in July, when, in the midst of holidays, passenger traffic began to recover, the company predicted a profitable quarter.
United Airlines views long-term prospects positively, because the current surge in diseases is less than the previous ones. Citi agrees: in the near future the number of diseases may decrease. Citi's goal for United Airlines stock is 67 $, What's on 44% above the current price.
American Airlines expects sales to drop by 24-28% compared to 2019 in the third quarter. The company noted, that passengers booked tickets less during the whole of August. Earlier, American Airlines predicted a decrease in quarterly revenue by 20%.
Southwest Airlines said, that compared to September 2019, revenue will fall by 25-30%. Previous forecast - 15-20%. According to management, the current wave of disease is less severe.
Low-cost airline JetBlue also changed its expectations for a reduction in quarterly revenue from 4-9 to 6-9%.
Despite claims by airlines, stocks rose on Thursday. Probably, investors expected the worst numbers. So, shares of United Airlines and Southwest Airlines gained 2,3%, American Airlines — 5,6%, JetBlue — 4%. Securities of other airlines also rose by several percent. Broad Market Index S&P 500 over the same period fell by 0,5%.
Business trips
When the rate of spread of the virus starts to slow down, vacationers will return to travel again. It was like this in the summer, when airlines talked about restoring passenger traffic and revenue. But in the case of business trips, which also affect airline revenues, everything is not so clear.
In May-June, the consulting company Deloitte surveyed 150 managers, who are responsible for allocating money for business travel. According to research, in the fourth quarter of 2021, companies' spending on flights will amount to 25-35% of the level of 2019, in the second quarter of 2022 - 40-60%, at the end of 2022 - 65-80%.
During the pandemic, many companies have revised their attitude to their spending.. To increase profits, 7 from 10 companies want to reduce the number of flights. Almost half, or 45%, will begin to closely comply with the allocated budget. See also 79% respondents said, that you would like to reduce the amount of harmful emissions into the atmosphere: fly less and hold online meetings. About 60% companies expect, that in 2022 they will spend less on attending conferences and events.
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