U.S. airlines caution on winter challenges as COVID-19 cases rise

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A Delta Air Lines pre-flight cleaning crew member uses an electrostatic disinfection device to clean an aircraft at JFK International Airport in New York

By Tracy Rucinski and David Shepardson

(Reuters) – Delta Air Lines <DAL.N> and Southwest Airlines <LUV.N> on Thursday cautioned that the recent surge in COVID-19 cases may have a negative impact on travel over the winter holidays, a period the sector had hoped would see improved bookings.

The United States on Wednesday reported new COVID-19 infections reached an all-time daily high for a second day in a row and the number of people hospitalized also surged to the highest ever during the pandemic.

“With the U.S. hitting a grim milestone of 10 million positive cases and outbreaks in Europe and other parts of the world, all signs point to a challenging winter ahead,” Delta Chief Executive Ed Bastian said in a memo.

The U.S. Transportation Department said the country’s airlines carried 65% fewer passengers in September versus the same month last year, the smallest decrease since March. Airlines say travel demand in November remains down 65%.

Airlines are making a renewed push for $25 billion in assistance after a $25 billion program of mostly cash grants for payroll approved by Congress in March expired on Sept. 30.

American Airlines <AAL.O> and United Airlines <UAL.O> last month furloughed 32,000 workers.

Talks between House and Senate committees overseeing airlines to hammer out language on more airline payroll assistance have resumed over the last week, but prospects for any immediate measure remain hazy.

“The situation in the industry is still dire,” said Airlines for America Chief Executive Nick Calio, noting that the U.S. industry is losing about $180 million a day. He said airlines were hopeful that the current Congress would act before the end of the year.

Bank of America Merrill Lynch has said increasing vaccine availability through 2021 would help slow the industry’s revenue decline to 47% in the first half of 2021 and to 19% by the end of next year versus pre-crisis levels.

“We have an operating plan next year that we believe we really should get all the aircraft up by the middle of the year,” American Airlines CFO Derek Kerr said on Thursday, adding he expects the airline to stop burning cash some time in 2021.

“Now if we don’t, what we’ll do is not bring the planes up and we won’t bring back the furloughs,” he told an industry conference.

Low-cost carrier Southwest said an improvement in revenues had been losing steam in recent weeks, prompting caution about December trends.

“While the company expected the (Nov. 3 U.S.) election to impact trends, it is unclear whether the softness in booking trends is also a direct result of the recent rise in COVID-19 cases,” Southwest said. “The company remains cautious in this uncertain revenue environment.”

The COVID-19 pandemic brought travel to a near halt earlier in the year, forcing airlines to scale back operations and seek government aid.

(Reporting by Tracy Rucinski and David Shepardson; Editing by Sonya Hepinstall)

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