American, Southwest add to US airline industry's 2Q losses

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ARCHIVO En esta fotografa de archivo del 25 de marzo de 2020, varios jets de American Airlines permanecen inmviles en una terminal del Aeropuerto Internacional Sky Harbor, en Phoenix. (AP Foto/Matt York, archivo)

DALLAS – Two major airlines reported huge second-quarter losses Thursday, and their leaders warned that the new surge in U.S. coronavirus cases has stalled the recovery in air travel and added to their industry's disarray.

American Airlines posted a loss of more than $2 billion, and Southwest Airlines lost $915 million. That pushed the combined second-quarter loss of the nation's four biggest airlines to more than $10 billion.

Southwest CEO Gary Kelly said he was encouraged by a pickup in leisure travel during May and June after the dark days of March and April. Southwest added flights for July and August.

Then in the last few weeks a surge in U.S. COVID-19 cases caused bookings to fall, Kelly said. Southwest rewrote its August schedule, dropping some flights.

“We're just going to have to be prepared to have a lot of volatility and be prepared to make frequent adjustments," Kelly said, “because it’s really almost impossible to plan right now.”

American — with hub airports in Texas, North Carolina and Arizona and a big operation in Miami — benefited when Sun Belt states eased health restrictions in the spring to boost their economies. Bookings by small and medium businesses in Texas rose from 10,000 in April to 45,000 in June even while corporate bookings were nearly zero, executives said.

The airline added flights in June and July, hoping to capture an increase in summer leisure travel. The gambit apparently worked. However, after Labor Day about 40% of American’s revenue typically comes from business travel.

“It’s pretty unreasonable at this point to think that we’ll be anywhere close to that” this fall, said Vasu Raja, the airline’s chief revenue officer. He said American still plans to increase flying from Dallas-Fort Worth and Charlotte but will trim routes that depend on business travelers.