Can U.S. Airlines Bounce Back With More Travel in the Cards?
The U.S. airline industry is finally breathing easy with traffic gradually picking up. The pandemic had left the entire global airline industry bleeding, with travel coming to a standstill. However, as more people are getting vaccinated and restrictions are being eased, traffic is witnessing an uptick.
However, there is a new challenge. While passenger traffic is getting back to pre-pandemic levels, layoffs during the lockdown have left the airline companies struggling. That said, the good news is that traffic is expected to pick up this summer, particularly during the Independence Day period, and airlines are rushing to hire crew.
Air Traffic Picking Up
The U.S. airline industry is finally witnessing an uptick in passengers. On Jun 10, the Transportation Security Administration (TSA) said that 2.03million travelers were screened at U.S. airports, the highest since March 2020. This was also the first time since the pandemic struck when over 2 million passengers were screened on a single day.
The 2 million mark definitely is an achievement given that there were days in April 2020 when less than 100,000 people traveled by air.
With over 50% of Americans above 18 years of age having received the at least one dose of the COVID-19 vaccine, people are a lot confident now. This has also seen the Centers for Disease Control and Preventions (CDC) easing restrictions.
Airline booking has been rising since February, since the time the vaccination drive gathered steam. And this summer is projected to get busier as more people make holiday plans. In fact, the TSA in a May memo warned its employees that more than a 100 of America’s largest airports will struggle with staffing shortage this summer.
Airlines Go on a Hiring Spree
While traffic is fast getting back to the pre-pandemic levels, airline companies are facing a new challenge that is compelling them to cancel hundreds of flights. U.S. airlines were already experiencing staff shortage, particularly pilots, going into the pandemic.
Things further worsened when they went for layoffs after the pandemic started biting into their profits. And now they are struggling to get back both crew and pilots. American Airlines Group Inc. AAL recently said that it will be canceling hundreds of flights. The airline will be trimming around 1% of its overall schedule through mid-July as it faces staff crunch.
That said, airline companies are aggressively hiring people as more people make bookings. The industry received $48 billion as government aid when the pandemic left them crippled. Later, they said that they would go for further layoffs and furloughs if more support did not come.
American Airlines was planning to furlough around 19,000 heads in October, while United Airlines Holdings Inc. UAL was expecting to slash around 1,600 jobs. Delta Air Lines Inc. DAL also planned to furlough 1,941 pilots last October after the federal aid got exhausted.
However, things have changed and now they are on a hiring spree. Southwest Airlines Co LUV plans to reinstate 2,700 flight attendants who were sent on voluntary leave following the pandemic when almost the entire fleet had to be grounded. Southwest has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Delta also recently announced to its staff that it plans to hire more than 1,000 pilots by next summer as they see growth in passengers. United Airlines and American Airlines too have already started hiring.
Moreover, American Airlines and JetBlue Airways Corporation JBLU will be adding 24 new routes across eight cities this summer as part of their Northeast Alliance partnership. The good news is that just when airlines were planning to furlough and layoff more employees, a sudden rise in air travel has not only saved thousands of jobs but also is expected to help the industry get back to normal.
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