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Southwest Airlines Co. said the recent spike in Covid-19 cases is slowing bookings and increasing cancellations, showing how quickly the Delta variant is kicking into economic activity.
The airline said on Wednesday that if demand for the key Labor Day weekend remained healthy, the recent slowdown would make it difficult to earn third-quarter profits, excluding the impact of government wage assistance. This is even after a fare sale designed to fuel the return of business traffic in the fall.
Southwest’s move reverses the bullish tone of airline executives just weeks ago, with the growing number of cases of the Delta Covid-19 variant leading to the cancellation of festivals and commercial events such as the Paris Air Show. New York auto scheduled for later this month.
Consumers are reconsidering their travel plans. The outbreak is also preventing some customers from eating in restaurants and has caused mask warrants to be returned to some retailers and municipalities.
The weekly average number of seated diners followed on the restaurant booking platform OpenTable was down 8% from 2019 levels for the week ended August 10, a reversal from the end of June, when the activity of catering topped 2019 levels. Credit card spending tracked by Chase shows spending on air travel has declined in recent weeks, while spending on restaurants has leveled off, analysts at JP Morgan said in a note on Tuesday. .
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