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Home Business American and Southwest Rethink Summer Flight Adds As Demand Stalls

American and Southwest Rethink Summer Flight Adds As Demand Stalls

(Reuters) – American Airlines (AAL.O) and Southwest Airlines (LUV.N) said on Thursday they are rethinking the number of flights they had planned to add to their schedules for August and September as COVID-19 cases spike in some parts of the United States.

Both had added more aggressively than competitors Delta Air Lines (DAL.N) and United Airlines (UAL.O) when demand started to pick up in May and June.

Now optimism has waned as some states scale back reopening plans and expand quarantines to tackle surging cases. Demand is not forecast to fully recover before a vaccine.

American, the world’s largest carrier, expects third-quarter capacity to be down about 60% from a year ago, lower than previously forecast, and is reviewing plans for the fourth quarter.

“We’ll add back only what makes sense,” American Chief Executive said on an investor call.

Shares in American were 2.6% lower while Southwest lost 2.4%.

Southwest, which analysts have forecast to weather the coronavirus pandemic better than larger U.S. carriers thanks to its domestic focus and lower-cost structure, said weakening revenues was increasing its daily cash burn rate to $18 million in July from $16 million in June.

Its average daily cash burn is seen stalling at $23 million per day over the third quarter.

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