American Airways says August earnings are weaker than anticipated because of Covid

An American Airlines passenger plane approaches landing at LAX during the coronavirus disease (COVID-19) outbreak in Los Angeles, California on April 7, 2021.

Mike Blake | Reuters

American Airlines said Wednesday that August revenue is lower than expected as a surge in Covid cases lowers bookings, the newest airline warning of the impact of infection on sales.

“It has been and we expect it will continue to be a very troubled recovery,” said Vasu Raja, American chief revenue officer, speaking at a Raymond James investor conference.

Raja said July revenue was above the airline’s expectations, but the surge in Covid cases resulted in weaker short-term bookings and higher cancellations. He added that year-end vacation bookings were strong.

The airline, along with Southwest Airlines, Frontier Airlines and Spirit Airlines, warned of lower bookings amid an increase in Covid cases.

“Given the fluidity of the current demand environment, we are not ready at this point to make any final adjustments to our capacity plans or guidelines,” said Raja.

The Transportation Security Administration said it screened 1.47 million people at U.S. airports on Tuesday, the lowest number since May 25. Travel demand often fades later in August when the summer vacation season comes to an end.

Business trips tend to increase in the fall. However, some companies are delaying getting back to their offices, which begs the question of how quickly business travel will recover.

“We expect business demand to recover more slowly than before, but there will still be a recovery in business demand,” said Raja. He added that year-end vacation bookings were strong.

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