United Warns Omicron Delays Travel Recovery, Raises Costs

United Airlines claimed the latest increase of Covid-19 infections has hampered bookings and would further delay the airline’s recovery from the pandemic.

The Chicago-based airline forecasts first-quarter revenue to be 20% to 25% lower than the same period in 2019 when it earned $9.59 billion.

United cut its growth projection for 2022, stating it would fly less this year than it did three years ago, abandoning its ambition to boost capacity by 5% from pre-pandemic levels. Costs would be up by 15% in the first quarter, excluding fuel, and capacity would be reduced by 16% to 18% compared to three years ago.

However, the airline stated that spring and summer bookings are high.

“The United team has been fighting through unprecedented obstacles to, once again, overcome the new and daunting challenges that COVID-19 is bringing to aviation, and I am grateful to each one of them for their commitment to taking care of our customers,” United Airlines CEO Scott Kirby said in an earnings release.

“Omicron is impacting near term demand; we remain optimistic about the spring and excited about the summer and beyond.”

Last week, Delta Air Lines also stated that the omicron variant had a negative impact on early 2022 bookings and would result in a first-quarter loss, but that is projected to be profitable by March due to a rebound in travel demand.

United reported a nett loss of $646 million, compared to a profit of $641 million in the fourth quarter of 2019, but this was a smaller loss than the $1.9 billion it lost in the same quarter of 2020.

In the final three months of the year, revenue was $8.19 billion, down roughly 25% from the same period the previous year, but it was the strongest quarter of the pandemic because of robust Christmas bookings. It surpassed analysts’ expectations of $7.97 billion.

Source: CNBC