By Rajesh Kumar Singh

CHICAGO, (Reuters) – The United States has made great strides since spring 2020, when COVID-19 brought it to its knees. But the threat of a pandemic could be a concern when large carriers begin reporting their quarterly earnings beginning on Thursday.

Omicron coronavirus, a highly contagious variant of Omicron coronavirus, is causing havoc in a industry that has a limited workforce. Mass cancellations of flights have been caused by a multifold rise in sick calls and a string of winter storms.

Nearly a third (33%) of United Airlines workers in Newark and New Jersey were sickened in the past day. There are currently 3,000 infected employees at the Chicago-based airline.

According to FlightAware, the largest disruption in the recent past years has been the cancellation of more than 30600 U.S. flights since Christmas Eve. This is about 7% of all scheduled flights.

The quarter to December period was the strongest in the last two years, even before the Omicron variant started to impact airline operations.

After a promising start, Delta Air Lines Inc. (NYSE:) Co and Southwest Airlines (NYSE;) Co forecasted a profit last month. Both airlines had expected to post a loss in the past.

The fourth-quarter earnings report of Delta Airlines is expected to be released on Thursday. Based on Refinitiv data, Delta is expected to earn an average of 15 cents per share according to analysts.

Wall Street also expects Southwest to report an adjusted profit of 9 cents per share by January 27th.

American Airlines (NASDAQ:) on Tuesday forecast a smaller-than-expected fall in fourth-quarter revenue. American Airlines and United Airlines both will release their financial results next week.

SURGE IN SICK CALMS

The expectation of a positive earnings surprise has been dampened by the virus-induced chaos.

In the first quarter of 2018, air travel demand is expected to slow down, which should help reduce staffing requirements for carriers. However, if the operation is not run smoothly, it could affect their earnings.

Peter McNally (global sector lead, industrials and energy), Third Bridge said, “If airplanes don’t fly, then airlines don’t make revenue.”

JetBlue Airways Corp (NASDAQ:) warned that there will be more cancellations once COVID-19 counts begin to drop. The majority of crew are located in Northeastern United States, where Omicron is rampant.

JetBlue spokesperson stated that Omicron has seen an increase in sick calls, “like many other businesses and organisations.”

Airline has slashed its flights through January and is now deploying managers and team leaders to support frontline operations. The airline is offering incentive to crew members that aren’t scheduled to work, to help them pick up extra shifts or trips.

United Airlines offers its pilots premium compensation to help with staffing concerns. Southwest also offers pay incentives to operational employees until Jan. 25,

BUMP-UP IN OSTS

Expect all the incentive programs and flight cancellations to increase the cost of the industry, which has seen its costs rise in recent years due to increased operations.

Prior to Omicron’s inception, many carriers assumed that an increase in international traffic and business would reduce the cost pressure and make them more profitable.

To run more flights this summer and spring, they all hired pilots and flight attendants.

However, the escalating COVID-19 case load has called into question that assumption and brought about a new round of border restrictions.

Delta last month stated that while the company was optimistic of a strong summer on the transatlantic route but the Omicron variant might delay an international traffic recovery by at least three more months. Transatlantic routes are one of the most profitable in the world, accounting for 17% of major U.S. airlines’ passenger revenues for 2019.

It has caused companies to put off bringing back their staff, further clouding the sector’s future cash cow, business trip.

Bank of America Corp (NYSE 🙂 analysts believe that the greatest threat to the airline industry is from the impact of the pandemic on corporate travel.

The bank’s analysts stated in a note that “the pandemic will continue driving travel patterns. But we believe it will most impact corporate travel.”