Airlines Struggle to Recover; American Airlines Reports Fourth-Quarter Loss

American Airlines reported a fourth-quarter loss of $931 million, signaling that many airline companies in the United States are still struggling to recover because of the COVID-19 pandemic. After posting this loss, American Airlines revealed that the company will continue to struggle towards recovery because of the Omicron variant of the coronavirus.

The Omicron variant is highly contagious, causing infections to surge around the country and the world. As a result, this has greatly impacted how airlines are able to conduct business. Previously, thousands of flights were canceled and delayed during the Christmas and New Year holidays, stranding many travelers around the country. Many flight crews and airline workers became infected with the Omicron variant, and therefore couldn’t work, which forced airlines to cancel many trips because they didn’t have enough workers to conduct business.

While this seems to have been worked out as much as possible, the threat of Omicron surging through crews remains. Plus, airlines also have many other concerns to continue to worry about — concerns that vary. For example, AT&T and Verizon’s new 5G service rollout was reduced, yet still caused many flights to be canceled this week. While this will likely be worked out in the near future, these canceled flights still impacted many airlines and their business activity.

According to American Airlines, they expect first-quarter revenue to be down as well, by about 20% to 22%, when compared to 2019. Other airlines look to be in the same position. The airline industry has experienced fewer bookings in the past few weeks because of the consistent spread of the Omicron variant. If these virus surges continue around the country, then bookings will likely continue to go down.

However, many airlines are remaining optimistic about an increase in travel around the spring and summertime. Because of this, many airlines do believe that they will reach profitability sometime later this year. 

The beginning of the year tends to be light when it comes to leisure travel, especially during January and February. During this time, airlines tend to rely on business and corporate travel. However, because of the Omicron variant, business travel has once again slowed down. According to the latest data, corporate travel has only reached 40% of what it used to be before the pandemic began.

For many airline companies in the United States, travel has fluctuated. Periods that experienced a large surge in travel often ended with new coronavirus variants popping up and causing bookings to greatly decrease. As variants may continue on into 2022, this may continue to be a problem for many airline companies. However, as the public becomes used to living during the pandemic, airlines are optimistic that travel will once again pick up later on in the year, especially during the summer. 

While American Airlines reported a fourth-quarter loss, the company still made double in revenue in 2021 when compared to what was made in 2020. However, revenue and total travel is still down from what was experienced before the pandemic ever began.