American, Southwest, Alaska add to airline loss parade in 3Q

DALLAS » Airlines are piling up billions of dollars in additional losses as the pandemic chokes off air travel, but a recent uptick in passengers, howevermodest, has provided some hope.

American Airlines on Thursday reported a loss of $2.4 billion and Southwest Airlines lost $1.16 billion in the third quarter, typically a very strong period of air travel that includes most of the summer vacation season.

Revenue tumbled 73% at American and 68% at Southwest, compared with a year earlier, before the global spread of COVID-19.

Combined with earlier losses reported by Delta and United, the four largestU.S. airlineshave lost at least $10 billion in each of the last two quarters. It’s an unprecedented nosedive that has caused the once highly profitable airlines to forage for billions of dollars in government aid and private borrowing to hang on until travelers return.

The airlines are offering upbeat forecasts about Thanksgiving and Christmas travel, however. Southwest, which had been one of the few remaining airlines blocking middle seats, feels confident enough that it will stop limiting capacity on its planes on Dec. 1. The airline said it will give customers on full flights more flexibility to change planes.

Since the early days of the pandemic, a few airlines including Southwest and Delta have blocked most middle seats to reassure passengers who are nervous about packed planes during a pandemic.

Southwest said it was dropping that policy because of “science-based findings fromtrusted medical and aviation organizations” about how COVID-19 is spread. Airline groups and aircraft manufacturers, relying in part on research by themilitary, say that strong cabin air flow and high-efficiency filters make planes safer than other indoor settings.

Officials at many airlines believe travel won’t return to normal until the pandemic is under control and a vaccine is widely available. That could meanmany more months of depressed revenue for the airlines.

Southwest CEO Gary Kelly on Thursday urged Washington to approve more pandemic relief, including a six-month extension of $25 billion in aid to airlines. Without it, he said, “we simply cannot afford to continue with the conditions required to maintain full pay and employment.”

Southwest plans to cut pay for nonunion workers by 10% in January and has demanded unions accept lower pay or risk furloughs.

Air travel in the U.S. has recovered slowly in recent months, topping 1 million daily passengers on Sunday for the first time sinceMarch. However, air travel in October is still down 65% from a year ago. Business travelers, who flymore often and pay higher fares, are still mostly absent.

“Really the difference is going to bewhenbusiness travelers start hitting the airways again, something that ismodestly starting up but is nothing close to what we need,” American CEO Doug Parker told CNBC.

Delta CEO Ed Bastian said recently that 90% of his airline’s corporate customers are letting some employees travel, but only a small number, and business travel is down 85% at his airline.

The airlines have been cutting workforces by convincing thousands of employees to leave, and in the case of American, by furloughing 19,000 workers this month. The airlines are still hoping for another $25 billion lifeline from Congress and the WhiteHouse that American said would allow it to recall the furloughed workers.