Issue No. 884
From One Crisis to Another?
Latin American Airlines Brace For a Potential Slowdown
Pushing Back: Inside the Issue
Third quarter earnings season continues, with a long parade of airlines set to report this week. Lufthansa, Air Canada, and Southwest are just a few of note. Last week, American and United were center stage, each describing the changing nature of post-pandemic air travel and emphasizing the growing importance of blended travel — in other words, people who combine business trips with leisure. Enabled by more flexible work schedules, blended travelers are more likely to fly during traditional offpeak times, days, and seasons, prompting a rethink of flight schedules.
United, by the way, (not to mention Delta which reported a week earlier) greatly outperformed American financially last quarter, sustaining a pre-pandemic trend. One great question for the U.S. airline industry going forward: Can American overcome its extended margin weakness? One lever it apparently hopes to pull: Getting a better deal from its credit card partner Citi.
There’s a great deal of success emanating from the Emerald City of Seattle, where Alaska again posted muscular margins. Aeromexico had a pretty good quarter too, aided by cost cutting undertaken while in bankruptcy. Icelandair had a great summer, underscoring the strength of transatlantic demand, especially among U.S.-based travelers taking advantage of the super-strong dollar.
But even in faraway lands like New Zealand, airline demand is booming. “The place is starting to buzz again,” said an Auckland airport executive. Japan’s reopening this month adds more fuel to the bull market. Now if only airline costs weren’t rising so rapidly as well.
Airline Weekly Lounge Podcast
Latin American airline executives are mostly bullish on the near-term outlook but, given their exposure to the strong U.S. dollar and other macro pressures, are cautious about what the new year may hold. Edward Russell and Jay Shabat discuss the forecast from the ALTA Leaders Forum in Buenos Aires this week, plus American and United's third quarter results. Listen to this week’s episode to find out. A full archive of the 'Lounge is here.