• Wed. Oct 5th, 2022

Airline industry returns to normal as analyst sees ‘insatiable’ demand

ByKimberly A. Brochu

Mar 14, 2022

Air travel has resumed, oil prices could fall and winter will end next week. Is this enough to revive the airline industry in 2022?

With the threat of the pandemic appearing to fade in the United States, about 10.6 million people were screened at airports Wednesday through Sunday, the Transportation Security Administration said. That’s more than the 10.1 million that was projected in the same period around Thanksgiving 2021.

On Friday, March 11, about 2.30 million people were cleared, the heaviest day since November 28, the Sunday after Thanksgiving, when 2.45 million were screened, the TSA said. Yesterday, 1.99 people were screened.

Oil prices are very high, but could be down.

Brent crude futures fell 1.6% on Sunday to $110.85 a barrel. Last week, Brent fell 4.8% after hitting $139.13 on March 7.

Before the invasion of Ukraine, the last time oil prices traded at $100 was in 2014. Prices have risen sharply since 2020, when they averaged around $39 the barrel.

In a report this morning, Bank of American analyst Andrew Didora wrote that leisure bookings are near 2019 levels and corporate bookings are improving.

“Leisure demand remains robust as this week’s volumes fell to just (negative 1.4%) from 2019, which is the best level of the year,” Didora wrote, adding, “We We’ve heard from many airlines on our recent trips that leisure demand is “insatiable” and prices are showing bigger gains.

He said domestic prices were 93% recovered this week, compared to 80% recovered a month ago.

Regarding business demand, Didora said corporate bookings through large channels improved to a 35.9% decline from 2019, while corporate bookings through smaller channels channels decreased by 4.4%.

Additionally, he said, international bookings were down 25.5%, despite the invasion of Ukraine.

In a report on Friday, JP Morgan analyst Jamie Baker wrote that on March 2, daily Chase Card spending for air travel eclipsed 2019 levels for the first time since January 29, 2020. “An important milestone has been reached,” Baker wrote.

“While the fuel narrative has naturally outpaced the demand narrative in recent weeks – and is expected to continue to dominate the narrative at the JP Morgan Industrials conference next week – demand trends continue to move in the direction that the overtaking the meteoric rise in fuel, at least during the summer peak, may prove possible,” Baker wrote.

The major airlines will all offer observations at Tuesday’s conference. American Airlines CEO Doug Parker is expected to speak, possibly in his last formal investor appearance before his scheduled March 31 appointment.st retirement.

Airline stocks were rising Monday morning. Shortly after 10:30 a.m., most airline stocks rose between 2% and 4%.