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Delta variant clips wings of US, Chinese, Aussie airlines; but Europe flies high

Delta variant clips wings of US, Chinese, Aussie airlines; but Europe flies high

Delta variant clips wings of US, Chinese, Aussie airlines; but Europe flies high
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By CNBCTV18.com Aug 25, 2021 5:41:24 PM IST (Updated)

Freer borders and lower quarantine restrictions on the back of effective COVID-19 vaccination drives in the EU have driven the recovery of European aviation giants like Ryanair, Lufthansa and Air France-KLM.

The recovery in the aviation sector has been thrown off course in countries like the US and China over fears of the Delta variant of coronavirus, but Europe is witnessing a turnaround on the back of inoculation drives, reports Bloomberg.

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Airlines in the US, China and Australia are expecting to report losses in the quarter through September on sluggish demand despite a short recovery in the summer months.
In the US, summer bookings had covered 80 percent of the pre-pandemic level passenger traffic. However, on August 11, Dallas-based Southwest Airlines Co said it expected its August revenue to drop 15-20 percent over the same month in 2019.
“The company has recently experienced a deceleration in close-in bookings and an increase in close-in cancellations in August 2021, which are believed to be driven by the recent rise in COVID-19 cases associated with the Delta variant,” the airline said in a filing.
Southwest Airlines reported a profit of $463 million in the first six months of this year on the back of over $5-billion financial aid to the aviation sector from the government since 2020.
Frontier Group Holdings and Spirit Airlines Inc are also expecting losses in the September quarter. Delta Air Lines Inc, which has gained almost 50 percent of its 2019 capacity level till now, expects corporate demand to fall due to the delay in reopening offices.
In China, airlines plan to fly only 360,509 flights in August, the lowest since February this year, says the Bloomberg report, citing data from Cirium. The country had recently shut down traffic at airports in Nanjing, Beijing and Yangzhou.
Australia’s Qantas Airways saw its domestic passenger traffic fall from 90 percent of pre-pandemic levels to 40 percent in July. This came on the back of the lockdown in the country’s two most populous states, New South Wales and Victoria. Qantas has put 9,500 workers on furlough till now.
Air New Zealand Ltd is also flying a restricted schedule of flights following the extension of lockdown in the island nation till August 27.
Despite the gloom, airlines in Europe seem to be flying to clearer skies, riding on freer borders and lower quarantine restrictions, says Bloomberg. Regional airline capacity has risen to two-thirds of the 2019 levels as against a third in April, with airlines like Wizz Air expecting capacity to soar to pre-COVID-19 level in August.
Ryanair is opening 250 new routes for the winter and is expecting a profit in the September quarter. Lufthansa said it is likely to open its North American routes from the end of summer. Air France-KLM hopes to reach 70 percent of capacity levels in the September quarter.
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