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U.S. Airlines Show Signs of Life After April Travel Collapse

https://finance.yahoo.com/news/u-airlines-display-signs-life-160828994.html

(Bloomberg) -- U.S. airlines reported signs that travel demand is perking up, suggesting the beginnings of a rebound from an unprecedented collapse because of the coronavirus pandemic.

Bookings are again outpacing cancellations and June reservations are showing “modest improvement,” Southwest Airlines Co. said Tuesday. United Airlines Holdings Inc. is seeing reduced cancellation rates and “moderate” strengthening on U.S. and some international routes. Delta Air Lines Inc. has noticed a slight bounce in leisure bookings, and American Airlines Group Inc. said it’s filling a greater portion of seats on its planes.

The nascent signs of recovery bolstered the outlook for at least a tentative comeback after consumers all but stopped flying in April because of the virus outbreak and government travel restrictions. Carriers cautioned that the landscape remains uncertain for an industry that has already received $25 billion in government payroll aid during the worst crisis in airline history.

A Standard & Poor’s index of major U.S. airlines was little changed at the close in New York, a day after a 14% surge amid a broad rally spurred by positive news about an experimental coronavirus vaccine. Southwest gained 2.2% to $27.69 in the Tuesday session. The others fell, paced by American’s 2.3% drop to $9.64.

Filling Seats

Southwest said in a regulatory filing that operating revenue this month would likely decline no more than 90% from a year ago, slightly better than the previous forecast of a drop of as much as 95%.

The percentage of seats filled per plane in May should average between 25% and 30%, compared with about 8% in April. The Dallas-based carrier earlier projected the figure would be no more than 10% in May. The forecast for capacity remains down as much as 70% from last year’s level.

Southwest also issued its first outlook for June, forecasting that operating revenue would drop as much as 85% and that capacity would decline as much as 55%. With fewer planes flying, its number of seats filled was projected to be 35% to 45%.

The airline also is starting to get a grasp on spending, projecting it would burn $25 million a day on average this quarter, down from an earlier estimate approaching $35 million. With cash use in the low $20 million range, as it this month, Southwest said it would take about 20 months before its $13 billion in cash and short-term investments would be depleted.