Airlines pare guidance as investors show relief it’s not worse

Bloomberg

A surge in coronavirus infections is delaying, but not derailing, the recovery at several US carriers, including United Airlines Holdings Inc and Southwest Airlines Co.
Most major carriers said customer bookings have slowed in recent weeks, signalling through regulatory filings and comments at an industry conference that the path out of the Covid-19 era remains bumpy.
Even so, several carriers reported that they’re seeing robust sales for Thanksgiving and Christmas holiday travel and remain optimistic about business demand, contributing to the biggest jump in one airline-stock index in seven weeks.
The carriers’ forecasts were mixed: United projected an adjusted pretax loss this quarter and next — contrary to its previous guidance — while Delta Air Lines Inc stuck by its projection for a third-quarter profit. Southwest and American Airlines Group Inc said third-quarter revenue will fall more than previously expected from pre-pandemic levels in 2019.
Even with United’s reduced outlook “it is worth noting that the carrier’s earnings story was starting to work in July,” Citigroup analyst Stephen Trent wrote in a client note. “And it seems fair to assume that a moderation in domestic infection rates might not be that far down the road.”
Airline shares pared early losses as executives spoke at a Cowen transportation conference, with the Standard & Poor’s 500 Airlines index rising as much as 5.2% in the biggest intraday gain since July 20.
There were jumps of as much as 7.7% at American, 5.4% at Delta, 4.8% at United and 4.3% at Southwest.
The airlines’ commentary on demand comes after a surprisingly strong summer travel season in the US. The pandemic’s persistence has prompted a growing number of corporations, including Apple Inc, Ford Motor Co and Amazon.com Inc, to delay returning workers to offices and resuming business travel. Such plans had been a key factor in airline industry views that sales would improve as the year winds down.