DALLAS — In releasing their third quarter earnings Thursday morning, both American Airlines and Southwest Airlines predict progress in the continuing recovery from pandemic-caused problems with staffing and ticket sales. But industry analysts suggest inflation, not COVID, will be the industry's next big hurdle.
"So I would be the first to admit that things are messy," Southwest Airlines Chairman and CEO Gary C. Kelly said in a morning conference call with investors in reference to recent staffing issues at the airline.
"I mean, nothing is normal right now. There's just all kinds of fits and starts," added Executive Vice President and incoming CEO Bob Jordan.
"It also illustrated that this virus and its effect on our business can be unpredictable and volatile," Kelly said of 3rd Q 2021 financial results.
Southwest's 3rd quarter operating revenues are down 17% compared with third quarter 2019. The company turned a net income profit for the quarter only because of the $763 million in payroll support it got from the American Rescue Plan.
Similar results at American Airlines. Not counting the federal government help it received, the company reported a loss for the quarter of $641 million.
"It's not a bright future. I know this is pouring water on the parade but I think we're going to have a very tough 2022 coming up," said Mike Boyd, with the aviation forecasting and consulting company Boyd Group International.
He said that although airlines like American and Southwest are showing steady improvement, after COVID and more recently after the impact on ticket sales by the Delta variant, that the next problem will be inflation: the rising cost of jet fuel and resulting price of airline tickets.
"But let's be real blunt. We've got inflation up the wahzoo," Boyd said. "And inflation takes money out of the economy. That means leisure travel is not going to be as strong as we hoped it would be."
Southwest said it is hopeful enough for increased bookings that it is adding 5,000 new employees by the end of the year and thousands more next year. And in its call with investors, the airlines both suggested that full recovery from the pandemic, and all of the problems it has brought to the airline industry, may take most of 2022.
"But let's put it on context. If they can get through this pandemic they can get through anything," Boyd added. "What they've been through in the past is enormously more than it could be facing in the future."