Omicron turbulence looms over US airline earnings

US airlines have come a long way since the spring of 2020 when COVID-19 brought the industry to its knees. Yet the pandemic will loom large when big carriers report quarterly earnings starting on Thursday. The latest wave of the health crisis, driven by the highly contagious Omicron coronavirus variant, has caused havoc for a short-staffed industry. A multifold increase in daily sick calls as well as a series of winter storms have led to mass cancellation of flights. Since Christmas Eve, US airlines have canceled more than 30,600 flights, or about 7% of the scheduled total, according to flight-tracking service FlightAware - one of the biggest disruptions in recent years. Until the Omicron variant began to take a toll on airline operations, the quarter through December was shaping up as the industry's strongest period in two years. The promising start prompted Delta and Southwest last month to forecast a profit for the quarter. Both carriers had previously expected to report a loss. Delta is due to report fourth-quarter earnings on Thursday. Analysts on average expect the Atlanta-based carrier to post an adjusted profit of 15 cents a share, according to Refinitiv data. Similarly, Wall Street expects Southwest's adjusted profit to come in at 9 cents a share on Jan. 27. American Airlines Tuesday forecast a smaller-than-expected fall in Q4 revenue. Both American and United Airlines will report their results next week. The virus-induced turmoil has dampened expectations of an upside earnings surprise. Air travel demand tends to cool off in the first quarter, which should ease staffing needs of carriers. Still, their earnings could suffer if they struggle to run a smooth operation. "If planes do not fly, airlines do not generate revenue," said Peter McNally, global sector lead for industrials materials and energy at research firm Third Bridge.<br/>