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Easing restrictions will boost U.S. airlines but business travel still unclear By Reuters


© Reuters. FILE PHOTO. Travelers wearing masks protect against the spread of coronavirus (COVID-19), reclaim luggage at Denver’s airport on November 24, 2020, U.S. REUTERS/Kevin Mohatt


By Rajesh Kumar Singh

CHICAGO (Reuters) – U.S. airlines will benefit from the Biden administration’s decision on Monday to reopen the country to fully-vaccinated air travelers from around the world, experts said, but the outlook for lucrative business travel was less certain.

The lifting of restrictions will enable tens or thousands of foreigners to fly to America. This allows American Airlines, United Airlines and Delta Air Lines (NYSE;) to recover some of their transatlantic operations.

Moody’s Investors Service, a division of Moody’s (NYSE 🙂 Investors Service, estimates that in six months the White House’s decision could result in a more robust operating cash flow by U.S. carriers.

Trans-Atlantic flight revenues accounted for between 11% and 17% of 2019 passenger revenue. According to Colin Scarola (Vice President Equity Research at CFRA Research), international travel accounted for 26%-38% of the airline’s 2019 revenue.

Scarola stated that “the international segment has been the most affected by this recession.”

It coincides the start of winter season which is historically considered a weak period for international travel. Scarola stated that the decision will encourage overseas businesses to travel, but he believes the fight against COVID-19 is more crucial and international travel won’t recover to its pre-pandemic levels until late 2022.

American Airlines’ CEO Doug Parker indicated that the company was looking forward to more people returning to smooth, international trips, whether for work or pleasure, as well as to reconnect with loved ones and family.

The data of Airlines for America, an industry trade association, shows that in early September the U.S. airline passenger numbers for international travel was only 44% below pre-pandemic levels.

An analyst with Raymond James, Savanthi Syth described the White House’s decision as an “incremental positivity” that will give U.S. air carriers more clarity in next year’s summer season. However, she did not change her outlook on air-travel or her financial projections for the White House.

She said that while this was a positive thing, it must be balanced with the events in America. This is her reference to the warnings made by airlines about the impact of the rapidly spreading coronavirus Delta on their finances.

Many airlines are cutting revenue forecasts due to a slower pace of bookings and more cancellations. Resurgence of cases also has stalled a pickup on business travel. A roundtrip in business class tickets for Chicago-New York United is nearly twice the cost of economy.

Syth said domestic business travel should remain lower than in 2019, at least through late 2022. She also stated that international business travel would not recover until 2024.

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