New airline bookings are beginning to slowly grow again after the surge in COVID-19 cases in July and state-by-state restrictions cut into the tepid recovery in the travel industry, Southlake-based travel technology firm Sabre Corp. said Friday.
Sabre, which recorded a $444 million loss and said that more passengers canceled flights in the second quarter than those booking new ones, showed just how fragile the recovery is in the airline and travel industry and how much travelers are monitoring the pandemic when making travel plans.
“The COVID-19 pandemic represents the greatest challenge ever faced by the global travel industry,” said Sabre CEO Sean Menke in a conference call, noting that the company’s revenues were down 94% compared to a year ago.
Sabre, which handles booking for airlines, hotels and car rental firms, repeated on a broader scale the struggle already articulated by airline industry executives during the last three weeks: The industry’s recovery has slowed and is highly dependent on the situation with the pandemic.
“North America started showing the strongest indications of recovery toward the end of June,” Menke said. “This trend reversed due to the increase in the number of reported COVID cases in some states, and further travel restrictions, but has leveled and began a slight growth trajectory.”
Menke said there has been a close correlation between bookings and news about infection rates in the U.S.
Transportation Security Administration data on travelers going through airport checkpoints has shown the same trends since the beginning of July, but Sabre’s data gives a glimpse into the future and shows that the increase in cases is worrying passengers.
Menke also said customers are continuing to book flights closer to departure dates. That shows that passengers are still uncertain about the conditions around traveling to other regions, including state quarantines and travel restrictions.
Business travelers are still hesitant to travel, a worrying sign as the industry moves away from the leisure-heavy summer season, Menke said. Business travelers usually buoy the airline industry between September and the beginning the holiday travel season in late November.
“This year that is not going to be the case,” said DFW International Airport CEO Sean Donohue on Thursday. “I think everyone realizes that business travel is very subdued and is going to be very subdued.”
Sabre has now lost $656 million this year in net income, mostly due to the COVID-19 pandemic. That’s nearly as much profit as the company totaled in the previous 2 1/2 years. It’s made deep cuts, laying off about 15% of its global workforce, too.
Sabre’s bookings were actually down 110% in the second quarter, counting cancellations. The number of net bookings were positive by June, but that was outweighed by the near total stoppage of the industry in April and May.
It’s no better at the major airlines. United, Delta, Fort Worth-based American and Dallas-based Southwest combined for more than $10.3 billion in losses in the second quarter alone.
Menke said the decline in business travel could have an outsized impact this fall. Business travelers tend to spend more on premium products such as business class, priority seating and boarding and also tend to book flights closer to their departure, which tend to cost more than tickets booked months in advance.