24.9 C
New York
Sunday, July 3, 2022

US Airlines relies on “unparalleled” travel demand to offset fuel hike

- Advertisement -
- Advertisement -

By Rajesh Kumar Singh, Abhijith Ganapavaram and Kate Holton

March 15 (Reuters) – U.S. airlines raised their revenue outlook for the quarter to March on Tuesday as falling COVID-19 cases boost travel demand, though they cut capacity plans in response to higher fuel costs.

Atlanta-based Delta Air Lines Inc said last week it dropped the biggest ticket sales in the company’s history due to an “unparalleled” increase in demand.

“We haven’t seen stronger demand … in my career,” Chief Executive Ed Bastian said.

Rival United Airlines Holdings says demand is “very strong” and business traffic is picking up faster than expected.

Shares of major US airlines were up 5% to 10% in midday trading.

Airlines are in strong demand to meet fuel costs, which have skyrocketed after Russia’s invasion of Ukraine, described by Moscow as a “special military operation.”

Fuel is their second biggest expense after labor, but major US airlines don’t hedge against volatility in oil prices like most of their European peers. The sector often tries to offset fuel costs with higher rates.

Tammy Romo, chief financial officer of Southwest Airlines, explained at an investor conference that the pricing environment has been healthy. The Texas-based airline has raised its fares.

Similarly, American Airlines said improved revenue is expected to more than offset increases in fuel and other expenses in the current quarter.

No Fruit cut capacity for the current quarter, which is now estimated to be down 10% to 12% compared to the same period in 2019. Delta, United, Southwest and JetBlue Airways have also moderated their capacity expectations. .

Be expects lower capacity at a time when travel demand is robust to push ticket prices even higher and help soften the blow of higher fuel costs.

Bastian said he is not at a “nervous point” about rising crude prices. Delta expects its fares to offset fuel costs in the second quarter.

Although the Russian invasion of Ukraine has forced the closure of large swathes of airspace, Bastian said Delta has seen no impact on bookings for flights to Europe.

Delta expects first quarter adjusted revenue to recover to about 78% of the pre-pandemic level, versus 72% to 76% previously estimated.

United said it expects quarterly revenue to be near the high end of its forecast. Southwest and JetBlue also include They expect an improvement in their income.

(Reporting by Rajesh Kumar Singh in Chicago, Abhijith Ganapavaram in Bengaluru, and Kate Holton in London; additional reporting by Nathan Gomes in Bengaluru; Spanish editing by Carlos Serrano)

Source link

- Advertisement -

New Articles