American Airlines on Thursday forecast a second-quarter pretax profit as strong bookings help it cover soaring fuel costs, the latest airline to report robust travel demand is outpacing expenses. American, the country’s largest airline, said March was the first month since the Covid pandemic began that its revenue surpassed 2019 levels and said bookings have continued to rise. The carrier forecast second-quarter sales as much as 8% higher than the same period three years ago even though it plans to fly between 6% and 8% less than its schedule for the same three months of 2019. That’s still a more fully recovered schedule than competitors Delta Air Lines and United Airlines, which have been more conservative about restoring capacity throughout the pandemic. American forecast business travel revenue will be 90% recovered to 2019 levels in the second quarter, led by small and midsize companies. “I’m a new CEO. People want to come and see me. It’s the same thing in the rest of the economy,” new CEO Robert Isom said Thursday. “People have been cooped up too long, relationships have faded, and they need to be reestablished.” American is the third major airline to report quarterly results so far this month. United said Wednesday it expects to return to a profit this year thanks to a surge in bookings and fares, echoing similar comments a week earlier from Delta. In March, US domestic airfares rose 20% from 2019 and bookings rose 12%, according to the Adobe Digital Economy Index. Newer data suggests at least a recent slide in demand. In the first 15 days of April, domestic bookings fell 2% as compared with the last 15 days of March though revenue only fell 1%, Adobe Analytics data showed. That was the first two-week period so far this year that bookings dropped compared with the previous 15-day period.<br/>
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Tech companies are making a big return to business travel, with Alaska Airlines and others reporting a significant uptick in corporate bookings in recent weeks. “There’s just been this material, as in a 50-point change, in booking levels for some of these big [tech] guys in the last few weeks,” Alaska Chief Commercial Officer Andrew Harrison said during the airline’s first-quarter earnings call on April 21. He did not name names but given Alaska’s headquarters in Seattle and hub in San Francisco, these companies likely include industry heavyweights like Amazon, Facebook, and Microsoft. The return of these corporate flyers is very good news for the industry. The business travel recovery as a whole has lagged behind leisure flyers, who have come back in droves since the summer of 2020. But although holidaygoers and those visiting friends and relatives have helped fill aircraft, they have done so at lower fares than are typically paid by road warriors. This has made the return of corporate travel one of the biggest watched items for airlines, and the return the big tech firms a significant hurdle for carriers like Alaska and United, which rely heavily on demand in the major tech hubs. Roughly 70% of 2019 corporate demand has returned, Alaska CEO Ben Minicucci said. This compares with the already fully recovered leisure segment at the airline. And Harrison said the return of business travelers helped drive yield improvements in the first quarter, when they rose to up 9% in March compared with three years earlier from an average of up 3.5% across the entire three-month period. Alaska’s new codeshare with American Airlines and membership in the Oneworld alliance have “opened up a lot of doors” for new corporate customers, said Harrison. However, he could not say how much this benefitted Alaska in Q1, and said he anticipated a clearer view by the September quarter. <br/>
American Airlines has added its voice to the growing chorus of travel industry companies calling for an end of pre-departure Covid testing rules for arriving international travelers. “We believe the US can safely follow countries that … have moved away from pre-departure testing,” American Chief Government Affairs Officer Nate Gatten said during the airline’s Q1 earnings call Thursday. He did not offer a timeline for when the US CDC could drop the rule, though Wall Street analysts suggested a potential May date. The testing requirement is widely viewed as a deterrent to a full international recovery by airlines and others in the travel industry. As it stands, any international travelers must show proof of a negative Covid-19 test within a day of their departure for the US. Many other countries, including Canada and the UK, have dropped testing requirements for fully vaccinated travelers. American views the removal of testing rules as key to “unlocking long-haul international demand,” according to its Q1 results presentation. Executives took a more nuanced view in their comments. “International is in a lot of different states of play right now,” American Chief Revenue Officer Vasu Raja said Thursday when asked about the impact of testing rules. Other issues include still continuing border restrictions in Asia, as well as a slower business travel recovery compared to the US domestic market.<br/>