Three U.S. airlines on Wednesday warned of higher fuel costs in the third quarter due to a jump in crude prices, adding to pressures the industry faces from expensive labor contracts.
New Pilot Contracts to Drive Up Costs at U.S. Airlines
25.08.2023 - 14:22 / skift.com / Delta Airlines / United Airlines / Southwest Airlines / United S.Airlines / Helane Becker / Airlines
U.S. airline profits are set to come under pressure in 2023 as they look to shell out more cash to retain pilots amid worries about the impact of a potential recession on travel demand.
Major carriers such as United Airlines Holdings Inc, American Airlines Group Inc, Delta Air Lines Inc and Southwest Airlines Co have rushed to add staff after a faster-than-expected rebound in the U.S. travel market.
Some airlines have had to hand out bumper contracts to pilots, stoking concerns about a rise in costs as they recover from the pandemic when they were saddled with heavy debt loads.
“Margins are set to take a hit in 2023 as airlines ratify new contracts with labor groups,” Cowen analyst Helane Becker said last month.
“We expect pilot pay, which represents approximately 40% of labor expense, will increase by 20% to 30% under the new agreements.”
In a recent note, BofA Global Research estimated that the industry will need to hire about 5,200 pilots per year from 2024-2030.
Last month, Delta offered a 34% pay hike to pilots, which aviators at rival carriers termed as a new “benchmark”.
“Delta’s recent tentative pilot agreement, assuming it is ratified, could drive incremental unit costs higher by ~2%, and 2%-3% higher for American, Southwest and United,” Barclays analyst Brandon Oglenski said on Wednesday.
While costs take center stage, robust travel demand, fueled by a pent up desire to venture out and household savings accumulated during the pandemic, could provide some relief.
Investors will be looking for commentary from executives on whether demand is holding up, beginning with Delta, which reports results on Friday.
American Airlines on Thursday forecast a higher fourth-quarter profit as the Texas-based carrier benefited from strong demand for travel during the key holiday season.
Shares of American Airlines, Delta Air Lines, United Airlines and Southwest Airlines fell between 14% and 30% in 2022 on mass cancellations and economic worries.
The website maxtravelz.com is an aggregator of news from open sources. The source is indicated at the beginning and at the end of the announcement. You can send a complaint on the news if you find it unreliable.
Top Autors
Popular Topics
travelpulse.com
05.09.2023 / 18:05
Southwest Airlines, American Airlines Facing Potential Strike Issues
There are problems at two of the nation’s top five airlines. Labor problems.
insider.com
05.09.2023 / 15:01
A United Airlines passenger's mom went viral complaining about their travel chaos. Now he's using his platform to demand more accountability.
Jack Ieronimo was one of the people on a United Airlines flight from Newark, New Jersey, to Rome, Italy, that made headlines after passengers said they were stuck onboard for seven hours without taking off.
skift.com
01.09.2023 / 15:25
Airlines Must Look Beyond Carbon Emissions to Go Truly Green
When travelers buy an airplane ticket, they’re often made aware of the carbon emissions from their trip. Google Flights and some airlines give fliers an estimate when they check fares, and carriers like British Airways and Qantas offer customers the option to buy carbon offsets or contribute to a “climate fund” in the booking process.
travelpulse.com
29.08.2023 / 22:37
Southwest Airlines Makes Changes to Pre-Flight Boarding Policies
Southwest Airlines recently made changes to its pre-flight boarding policies by limiting the options for passengers to purchase a better spot in line for an extra fee.
skift.com
25.08.2023 / 15:03
Devastating Maui Fires Likely to Dampen Airline Demand for Extended Period
The deadly wildfires on the island of Maui are likely to affect visitor — and airline — demand to the island for the “foreseeable future,” analysts at T.D. Cowen said Friday.
skift.com
25.08.2023 / 14:40
Airlines Tweak Schedules Toward Leisure Routes as One-Day Business Trips Falter
Airlines around the world are ripping up schedules and bringing in new flights to cope with a COVID-triggered trend in corporate travel for executives like Jerome Harris – the scrapping of one-day business trips in favour of longer stays.
skift.com
25.08.2023 / 14:40
Mesa Airlines Finalizes Agreement With United, Cutting Ties With American
Mesa Airlines said late Saturday it is finalizing an agreement to operate regional flights for United Airlines after an announcement it will wind down flights for American Airlines early next year.
skift.com
25.08.2023 / 14:35
Newark Airport Sets Opening Date for First New Terminal in 34 Years
It’s not often that travelers have something to look forward to at Newark Liberty International Airport. The new $2.7 billion Terminal A will open in December, the latest in a series of major airport projects opening around the U.S. this year.
skift.com
25.08.2023 / 14:08
United's New Kid-Friendly Booking Policy
Good morning from Skift. It’s Tuesday, February 21. Here’s what you need to know about the business of travel today.
skift.com
25.08.2023 / 14:01
United Airlines Forecasts a Surprise Loss on Weaker Demand, Higher Pilot Pay
United Airlines Holdings Inc on Monday forecast an unexpected loss in the current quarter, citing lower demand as well as higher costs from a potential contract deal with pilots.
skift.com
25.08.2023 / 13:56
U.S. Airlines Insist Demand Still Red Hot: But for How Long?
It’s like that bunny in the old Energizer battery commercials: Still going.