(Adds European airlines)
By Rajesh Kumar Singh and Sarah Young
CHICAGO/LONDON, Sept 21 (Reuters) - America's reopening to
international air travelers can't come soon enough for U.S. and
European airlines which have sorely missed the lucrative
transatlantic market.
The Biden administration's decision https://www.reuters.com/world/uk/us-relax-travel-restrictions-passengers-uk-eu-november-source-2021-09-20
on Monday to reopen the country to fully-vaccinated air
travelers from around the world will allow tens of thousands of
passengers to fly to the United States from early November.
For the large traditional European airline players, like
British Airways-owner IAG, Lufthansa and Air
France-KLM, it represents a chance to recover the
transatlantic routes that are key to their profits.
U.S. carriers, American Airlines, United Airlines
and Delta Air Lines, will also benefit, although
their finances had already been helped by a recovery in the
large U.S. domestic market to near pre-pandemic levels.
"The transatlantic market is a key profit generator for the
main European legacy airline groups," said Bernstein analyst
Daniel Roeska.
Pre-pandemic, in 2019, those routes accounted for more than
26% of IAG's revenues, Roeska estimates, over 24% of Lufthansa's
and over 16% of Air France-KLM's. Transatlantic flights
accounted for between 11% and 17% of U.S. airlines passenger
revenues that year.
Shares in IAG rose 4% on Tuesday, having jumped 11% on
Monday when the White House announced the reopening. Air France
was up 3% on Tuesday.
The news will also benefit British-based airline Virgin
Atlantic, a transatlantic specialist, which has turned to cargo
to help it survive the pandemic.
LEAN WINTER
The lifting of restrictions coincides with the onset of
winter season, historically a lean period for international
travel, when many airlines tend to make a loss.
Colin Scarola, vice president equity research at CFRA
Research, said the decision would encourage companies to approve
overseas business trips, yet COVID-19 risks remain, and he does
not expect international travel to rebound to pre-pandemic
levels before late 2022.
British Airways said that its customers were keen to fly
again, citing an increase of nearly 700% in searches for
holidays to U.S. destinations like New York, Orlando, Las Vegas
and Miami on its website on Monday, versus the same day last
week.
In the United States, though, airlines fear the travel
recovery could by blunted by the Delta variant of the
coronavirus.
While Europe has been contending with the fast-spreading
variant for months, it hit the United States later and carriers
there have warned this month about the consequent financial hit.
Several airlines have slashed revenue forecasts, citing a
slowdown in bookings and increased cancellations.
Savanthi Syth, an analyst at Raymond James, called the White
House's decision an "incremental positive" that would give U.S.
carriers clarity for next year's summer travel season. Yet it
did not prompt her to revise her financial estimates for them or
the outlook for air-travel.
In early September, U.S. airline passenger volumes for
international travel were just 44% of the pre-pandemic levels,
according to data from trade body Airlines for America.
(Additional reporting by David Shepardson in Washington;
Editing by David Gregorio, Chris Sanders and Pravin Char)
International Airlines (IAG)
