Flying overseas in business-class or better is one of those things — like getting the Good Seats at the game — that, once you’ve done it, it’s hard to go back to coach or the bleachers. Some luxuries, you will convince yourself, are worth paying for. According to The Wall Street Journal, one such option — first-class seats on international American Airlines flights — is soon going away. American says this decision was made, in part, to add more business-class seats, which these days, are more or less what the old first-class was anyway.
American had previously said as much last month, though WSJ reports that on an earnings call on Thursday, an American executive said plainly that the airline is making the change for the simple reason that first-class isn’t selling as well as the other good seats on the plane.
“And frankly, by removing [first-class seats], we can provide more business-class seats, which is what our customers most want or are most willing to pay for,” [said Chief Commercial Officer Vasu Raj.]
[…]
…the airline will outfit its long-haul fleet with new “Flagship Suites,” which include seats that lie flat and sliding doors for privacy, in a revamp that will increase premium seating on those planes by more than 45% by 2026.
The new suites will be included on newly delivered Boeing 787-9 planes and Airbus A321 XLRs starting in 2024. American will also retrofit its Boeing 777-300ER planes to include the new suites.
The sliding door thing seems a little unnecessary, but then again people get real weird on planes, especially on long-haul trips, and some people value their privacy more than I do. More importantly, this says that many of the business-class seats lie flat, which is the real game-changer, as deplaning overseas after hours of fitful, garbage sleep in an upright chair as opposed to restful, continuous sleep lying flat makes a night-and-day difference.
This seems, in any case, mostly an exercise in branding, as “first-class” just sounds more expensive than “business-class,” which, as the WSJ notes, has most of the same benefits anyway. Is either of them worth it for you, a poor dirtbag? That is a personal decision, though I prefer to save my nickels for my destination, and arrive in London or wherever stiff as a board, having flown coach. The times I have flown first- or business-class were paid for by someone else, which was nice of them. On one such flight, I even sat next to the actress Rooney Mara once. I’m sure she was doing something a lot cooler in France than driving a dumb luxury SUV.
At JetBlue Airways Corp., executives felt confident coming into the Christmas season. The airline had flown through Thanksgiving week with hardly any hiccups.
Then Covid-19’s Omicron variant arrived. With its headquarters in New York, which leads the country in new case counts, JetBlue was quickly overwhelmed. Daily sick calls more than quadrupled. On Dec. 21, JetBlue canceled no flights. Four days later, on Christmas Day, it scrapped 12% of its schedule.
“Because of the exponential increase, you get to a point where you exhaust all your available reserves,” Chief Executive Robin Hayes said.
Airlines are struggling through one of the most severe and persistent mass-cancellation events of the past decade, according to data compiled by FlightAware. U.S. Covid-19 infections surged too quickly for carriers to manage without upending holiday travel, wreaking havoc on already-stretched airline workforces. Now carriers are assessing how to better manage what could continue to be a difficult period, at least for the next few weeks.
Airlines scrapped more than 3,000 U.S. flights and delayed more than 5,000 on Monday. The new wave of cancellations and delays comes as the surge in Covid-19 infections in the U.S. has left the airline industry stretched thin. Photo: Chandan Khanna/AFP/Getty Images
Airlines have canceled more than 1,000 daily U.S. flights for 13 straight days, including over 2,500 on Friday as another winter storm brought snow to Boston and New York.
Flights scrubbed from Christmas Eve through Jan. 6 exceeded 24,000, roughly 7% of the number airlines had planned to fly, according to flight-tracking service FlightAware.
For airlines, the upheaval of the pandemic is heading into a new phase. Unlike in early 2020, when terrified passengers canceled trips in droves, new variants dent but don’t decimate appetite for travel. But airlines are still rebuilding their operations. The twin challenges of rising numbers of employees calling out sick after being infected or exposed to Covid-19, and a series of severe winter storms that hit major hubs from Seattle to Chicago to Washington, D.C., created the perfect conditions for travel chaos.
It became clear that a problem was brewing early in the week of Christmas, said
Sara Nelson,
president of the Association of Flight Attendants-CWA.
“Thanksgiving went off without a hitch. We had two things going for us: We didn’t have Omicron, and we didn’t have any winter storms,” she said. “No one saw Omicron coming.”
The trouble spiraled as more workers became infected. “I was getting notices that entire crews were testing positive and they’re out of the country, in a location where they don’t have other crews. There’s no way to get that aircraft back,” Ms. Nelson said.
A check-in line at Seattle-Tacoma International Airport on Dec. 27.
Photo:
LINDSEY WASSON/REUTERS
Delta Air Lines Inc.
DAL 3.63%
was the first to flag the potential for disruption. Chief Executive
Ed Bastian,
along with the airline’s chief health officer and a medical adviser, asked the director of the Centers for Disease Control and Prevention on Dec. 21 to consider halving its recommended isolation period for fully vaccinated people who come down with breakthrough Covid-19 infections. They cited potential workforce shortages and new information about the Omicron variant. JetBlue followed with its own letter a day later.
Airlines had been under pressure from both travelers and lawmakers to deliver a smooth holiday season after meltdowns last summer and fall. Carriers including
Southwest Airlines Co.
LUV 3.25%
and
American Airlines Group Inc.
AAL 4.23%
at times struggled to maintain the buffer needed to quickly recover from storms or other disruptions, resulting in thousands of canceled flights.
Delta and
United Airlines Holdings Inc.
UAL 3.53%
were among the airlines facing the toughest problems in recent weeks. But almost no airline emerged completely unscathed.
“It has been one of the most difficult operational environments we’ve ever faced, and it forced us to cancel hundreds of flights as a result,” Delta’s chief customer experience officer,
Allison Ausband,
wrote to its frequent fliers on Jan. 5. Delta said Thursday that another round of storms headed for the Northeast would likely result in hundreds more cancellations.
Airlines aren’t alone in facing shortfalls as the Omicron variant rips through workforces. Public-transit services in New York and other cities have been disrupted. Retailers, bars and restaurants have had to temporarily close or curtail hours. School closures are at their highest point of the academic year as teachers call in sick.
Airlines operate under strict safety rules that can leave them little recourse but to cancel flights when they are short of staff in the right places. Pilots aren’t always trained to fly multiple aircraft types, for example. Regulations dictate how much rest crews must get between shifts. And employees such as flight dispatchers and mechanics can take on only so much extra work safely.
William Humphrey, 35 years old, had hoped to return on New Year’s Day from a family visit to Omaha, Neb. Citing weather, United canceled his flight and rebooked him for Jan. 2. He instead took a refund and switched to a quicker route with Delta, but that flight was canceled, too, as were two more of his Delta flights on Monday.
Dr. Humphrey, a resident physician working in Burlington, Vt., worried about finding coverage at his already short-handed office. On Tuesday, when a delay in his flight from Omaha to Detroit caused him to miss his connecting flight home to Burlington, he instead booked a flight to Albany, N.Y., rented a car, and drove the rest of the way, a three-hour trip.
“It seems like it’s getting more and more chaotic,” he said.
Waiting at Newark Liberty International Airport in Newark, N.J., on Monday.
Photo:
Christopher Occhicone/Bloomberg News
Airlines are preparing for the difficulties to last at least a few more weeks.
Alaska Air Group Inc.
ALK 2.94%
said Thursday that it will reduce Alaska Airlines departures by 10% through the end of January, citing an unprecedented rate of employee sick calls due to Omicron and the need to find a way to navigate Covid-19 as a “continued reality in our business and our world.”
“This will give us the flexibility and capacity needed to reset,” the airline said in a statement.
Southwest said that through Jan. 25 it will offer pay incentives, including up to double pay for working extra shifts, to employees such as flight attendants, customer-service representatives and mechanics. Southwest canceled over 2,500 flights this week, including more than 500 on Friday—17% of the flights it planned that day, according to FlightAware, as Omicron-related sick calls made it harder to recover from severe weather such as a major snowstorm that hit Washington, D.C., early this week.
An airline spokesman said Southwest is focusing on stabilizing its operation in the wake of winter storms while maintaining sufficient staffing as Covid-19 cases jump.
Carriers typically maintain higher staffing levels as a buffer against bad weather and other unexpected events over the busy holiday season—when demand runs high and staff callouts tend to be elevated even in the best of circumstances—said
Geoff Murray,
a partner at consulting firm Oliver Wyman. Airlines are still clamoring to hire more staff, he said, with regional carriers suffering a dearth of pilots and major carriers contending with training logjams.
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“There was not a lot of slack in the system,” Mr. Murray said. “The only alternatives the airlines had were to further cut back schedules going into the holiday. With the booking levels they were looking at, that would have been very difficult to do.”
At United, the number of pilots out sick, including those with Covid-19, those awaiting test results and those with other illnesses, climbed to about 900 this week from about 500 shortly before Christmas. And the number of pilots with active Covid-19 infections more than doubled to nearly 500 during that period, according to a spokesman for the union that represents United’s pilots.
The airline rushed to bump pay for pilots willing to take on extra trips, with negotiators working past midnight on Dec. 31 to craft an incentive agreement that offers up to triple pay for certain trips. United hasn’t shortened the 10-day quarantine period for pilots and flight attendants who become ill with Covid.
While airlines are still canceling flights, they will likely get a measure of relief from the typical travel slowdown following the winter holidays. Airlines tend to operate fewer flights in January than at the end of December. Airports screened 1.5 million passengers Thursday, pulling back from daily highs of more than 2 million at the height of the holiday rush, according to the Transportation Security Administration.
“I think we’ll start seeing more people coming back to work than calling out,” said JetBlue’s Mr. Hayes. “And I think that will allow us to recover very quickly from the middle of January onwards.”
The Omicron variant has prompted new travel restrictions around the world.
Joe Raedle/Getty Images
Stocks were rebounding Monday following Friday’s rout as vaccine makers said that they can adjust their Covid-19 vaccines to adequately immunize against the Omicron variant.
In afternoon trading, the
Dow Jones Industrial Average
was up 320 points, or 0.9%, after the blue-chip benchmark plunged 905 points Friday. The
S&P 500
was up 1.6%, and the
Nasdaq Composite
advanced 2.1%. All three indexes notched their worst Black Friday on record at the end of last week, with the Dow suffering its worst day of the year. The last time the Nasdaq moved at least 2% on back-to-back days was March 8 and March 9 of this year.
“Keep in mind, while COVID continues to be a serious threat, we’re in a very different place than we were at the start of the pandemic in terms of medical advances and the strength of our economy,” wrote Chris Larkin, managing director of trading at ETrade.
Pfizer
(ticker: PFE) said over the weekend it can adapt its vaccine to address the new variant within 6 weeks.
Moderna
(MRNA) said it could potentially roll out a reformulated vaccine by early 2022. Moderna stock was up 11% Monday, while Pfizer was down 1.2%.
It wasn’t just stocks that were signaling investor optimism. The 10-year Treasury yield rose to 1.53% from 1.48% at Friday’s close, a sign that that investors are moving out of safer assets and into risky ones. The price of WTI crude oil rose more than 4% to above $70 a barrel after having dropped more than 10% Friday.
These are all good signs, but markets are still monitoring the Covid-19 situation. Just this month, new lockdowns in Europe were announced and the Omicron variant seems to be spreading globally.
“Expect markets to remain choppy near term as we wait for further details on the new variant,” wrote Keith Lerner, co-chief investment officer at Truist.
Overseas, London’s
FTSE 100
climbed 0.9%, rebounding from its largest one-day drop of 2021. In Asia, where markets closed before Friday’s selloff steepened, Hong Kong’s
Hang Seng Index
was 1% lower.
Here are five stocks on the move Monday:
Sectors that were slammed Friday—like travel—were generally higher, but most remained below levels seen before news of Omicron broke. Cruise operator
Carnival
(CCL) rose 1.5% initially, before that gain moderated to 0.4%. “I also would be buying travel/leisure stocks as if there is a mega trend that keeps bouncing back in the face of Covid,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group.
Hyatt Hotels
(H) gained 4.2% after getting upgraded to Overweight from Neutral at JPMorgan.
TJX Cos.
(TJX) stock advanced 1.8% after getting upgraded to Buy from Neutral at Citigroup.
Bumble
(BMBL) stock rose 3.5% after getting upgraded to Outperform from Market Perform at Raymond James.
United Parcel Service
(UPS) stock dropped 0.4% after getting downgraded to Hold from Buy at Deutsche Bank.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Jack Denton at jack.denton@dowjones.com
Palantir stock jumped on a U.S. Army contract; Airlines are slipping as fuel costs surge
Stocks dropped after the opening bell, with technology shares leading losses as bond yields extended rises. Here’s what we’re watching as Wednesday’s trading heats up.
Chart of the Day
Write to James Willhite at james.willhite@wsj.com
…
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Stocks dropped after the opening bell, with technology shares leading losses as bond yields extended rises. Here’s what we’re watching as Wednesday’s trading heats up.
Palantir Technologies
jumped 7% in early trading. The data-software company said it was selected for a U.S. Army intelligence program contract.
Facebook
shares ticked 1.1% lower after the company spent a day in the headlines amid a whistleblower’s testimony on Capitol Hill and a widespread outage of its services.
But the downdraft in major tech shares was hitting most of the giants.
Microsoft
slipped 0.8% ,
Apple
shed 1.4%, Google-parent
Alphabet
fell 0.8% and
Netflix
gave up 0.4%.
Cryptocurrencies turbo-charged by Tesla CEO
Elon Musk
got another boost Wednesday. The token Shiba Inu gained 48% over the previous 24 hours, adding to a days-long rally after Mr. Musk posted a new photo of his Shiba Inu puppy named Floki on Monday. The coin now has a market value of $9 billion, making it the twentieth largest cryptocurrency, according to CoinMarketCap.com. Dogecoin, a favorite of Mr. Musk’s, also rose 3% over the previous 24 hours.
Shares of
American Airlines Group
lost 2.5% and
Delta Air Lines
shed 1.7%, weighed down by concerns about fuel costs and a slowing economic growth.
Acuity Brands
soared 13% after the industrial-technology company said its profit for the fiscal fourth quarter rose as sales benefited from improved service levels and an improving economy.
Vaccine makers
Moderna
and
Novavax
look set to remain stuck in the doldrums that began after Merck’s successful test of its Covid-19 treatment. Novavax dropped 3.1% and Moderna fell 4%.
Pfizer
was also down, by 0.8%.
Business-development company
Saratoga Investment
‘s stock nudged up 1.8% after it reported record repayments during the second quarter.
Levi Strauss
will give an earnings update after the close.
Chart of the Day
Silver prices just wrapped up their worst four-month stretch since November 2014, dragged down by expectations for higher interest rates and a slowdown in manufacturing activity.
As if we needed any more problems, passengers from hell are a thing now (or more a thing than before, anyway). They assault flight attendants, toss food and alcohol around, and throw their masks on the ground. Delta Air Lines has apparently had enough.
In two internal memos to employees this week, Delta said it had asked its competitors to share their internal no-fly lists, which it says would prevent crappy passengers from causing trouble on different airlines. The company has so far submitted more than 600 names of banned passengers to the Federal Aviation Administration this year.
The memos were sent on the same week that Delta participated, through the industry trade group Airlines for America, in a hearing on “air rage” held by the House Committee on Transportation & Infrastructure on Thursday.
Kristen Manion Taylor, senior vice president of inflight service, said in her memo that Delta had more than 1,600 people on its internal no-fly list. She added that the company had been analyzing safety on its flights over the past few months and would roll out additional measures on training and response on board.
“We’ve also asked other airlines to share their ‘no fly’ list to further protect airline employees across the industry – something we know is top of mind for you as well,” Taylor said. “A list of banned customers doesn’t work as well if that customer can fly with another airline.”
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It’s not clear how such information-sharing would work, though. When asked by the Washington Post, Delta did not elaborate whether sharing the internal lists should be done via the federal government or directly with other airlines.
According to the FAA, the majority of the problems with unruly passengers this year are related to individuals refusing to comply with federal mask mandates. Since January, the agency has received about 3,889 reports of unruly passengers. Of those, 2,867 involved the mask mandate. As of August, the FAA had fined these passengers more than $1 million in fines for their bad behavior.
At the hearing, Lauren Beyer, the vice president for security and facilitation at Airlines for America, said that “there are legal and operational challenges with airlines sharing those lists amongst one another,” the Post reported.
In response, committee chairman Peter DeFazio, Democrat of Oregon, mulled whether it would be possible for the FAA to create a database with the information from the airlines’ no-fly lists that all companies could access. Nonetheless, the FAA did not commit to the idea on Friday, telling the Post that it was meeting with airports, airlines, unions, and others to discuss what measures it could take to address unruly passengers.
Airline executives said they are starting to see a path out of the coronavirus pandemic as more passengers resume travel, following a weekend when airport volumes hit their highest levels in a year.
Delta
DAL 2.33%
Air Lines Inc. bookings began picking up five or six weeks ago as people have begun making plans for spring and summer, Chief Executive Officer
Ed Bastian
said at an industry conference Monday.
“We’ve seen some glimmers of hope over the last year, but they’ve been false hope,” Mr. Bastian said. “But this seems like it’s real.”
Airline stocks climbed Monday. Shares of
United Airlines Holdings Inc.
UAL 8.26%
rose 8.3%, while shares of
American Airlines Group Inc.
AAL 7.70%
climbed 7.7% and Delta shares rose 2.3%.
The pandemic brought travel to a near halt last spring. Travel restrictions and fear of infection kept people at home and out of airports for most of the year: U.S. airlines carried 60% fewer passengers in 2020 than in 2019, bringing passenger traffic to the lowest level since the mid-1980s, according to the Bureau of Transportation Statistics.
Major U.S. airlines lost about $35 billion in 2020. But on Monday, United and Delta said they could stop bleeding cash this month.
That was hard to imagine at the beginning of this year. Airline executives said January and February were even weaker than they expected, as a high numbers of cases, the rise of more contagious variants, and new Covid-19 testing requirements for people arriving from abroad had a chilling effect.
Executives said they remain cautious. The Centers for Disease Control and Prevention still advises against travel, and the number of people passing through U.S. airports is still half—or less—of what it was for most days in 2019, according to the Transportation Security Administration.
But the numbers are climbing. Airports screened nearly 1.36 million people Friday and more than 1.34 million people on Sunday, two of the busiest days since March 2020.
Numbers of new Covid-19 cases are dropping, and distribution of vaccine doses has picked up. President Biden said earlier this month that the U.S. will have enough vaccines for all American adults by the end of May.
Some states, including New York and Connecticut, are relaxing rules requiring that inbound travelers quarantine.
And there is more to do once people arrive. California, for instance, has paved the way for
Walt Disney Co.
’s Disneyland and other attractions to reopen at limited capacity if certain test positivity benchmarks are met. State and local governments—even in heavily restrictive states such as Michigan and Illinois—are allowing restaurants to seat some patrons indoors again.
Southwest Airlines Co.
LUV 1.75%
and JetBlue Airways Corp. also said Monday that more people are making plans to travel, booking vacations or trips to visit friends and family, helping to pare expected revenue declines this quarter.
Amy Curtis, who lives in Arizona, has been vaccinated since the end of February. When she learned over the weekend that her mother in Pennsylvania had also received her second shot, Ms. Curtis decided to book a visit.
“It was one of those impulsive things,” she said. “Life is so short—I feel like I need to take this opportunity. I don’t know when I may have it again.”
Ms. Curtis said she doesn’t yet feel comfortable traveling just for fun or vacation. But others are hitting beaches and ski resorts, according to airlines and analysts. JetBlue sold more bundled flight-and-hotel vacation packages last week than ever before, Chief Executive
Robin Hayes
said at the conference hosted by
JPMorgan Chase
& Co.
Bookings to destinations such as Florida and Hawaii, while still down from 2019 levels, are holding up better than other areas, according to data from ForwardKeys, a travel-analytics company. Domestic bookings were 42% of 2019 levels in the first week of January but were at 64% of 2019 levels in the first week of March, according to its data.
“There has been progressive growth in U.S. domestic bookings every week since the beginning of the year,” said
Olivier Ponti,
vice president of insights at ForwardKeys.
The recent uptick in flight bookings is helping to stem the amount of cash the carriers have been losing daily, executives said Monday. Airlines have been on track to burn through $150 million in cash a day during the first three months of this year, according to trade group Airlines for America.
United CEO
Scott Kirby
said at the conference Monday that the company expects its cash flow to turn positive, excluding debt payments, this month. Mr. Bastian also said Delta expects to stop burning cash as soon as this month.
“We know that we can’t yet put Covid in the rearview mirror,” Mr. Kirby said, noting that the airline remains unprofitable and would have to focus on repaying the debt it has taken on. But he said he expects there could be a steady travel boom on the way after a year when many people suspended or curtailed leisure experiences.
Airline executives have long said that travel demand would roar back once more people are vaccinated. While many international borders remain closed and businesses aren’t rushing to resume client meetings and conferences, executives said there are signs that pent-up demand is returning.
“Our last three weeks have been the best three weeks since the pandemic hit,”
American Airlines
AAL 7.70%
CEO
Doug Parker
said.
Airports in Paris and Singapore as well as airlines including United and JetBlue are experimenting with apps that verify travelers are Covid-free before boarding. WSJ visits an airport in Rome to see how a digital health passport works. Photo credit: AOKpass
Carriers are also on firmer financial footing, having secured three rounds of government aid to cover the costs of paying workers, in addition to billions of dollars of private funding. The American Rescue Act that President Biden signed into law last week includes $14 billion to cover salaries and benefits for airline workers in exchange for pledges not to furlough or lay off employees until the fall. That brings the total amount of government payroll support for airlines to $54 billion.
American Airlines also said last week it would raise $10 billion by putting up its frequent-flier program as collateral.
Mr. Parker said, “For the first time since this crisis hit a little over a year ago, we at American are not looking to go raise any money.”
