As the travel-related holiday weekend of July 4 approaches, airlines continue to struggle with flight cancellations, putting further pressure on their share prices.
Shares of most major carriers declined on Thursday, albeit to varying degrees.
United Airlines Holdings
(ticker: UAL) on Thursday said it plans to cut 50 daily departures from Newark Liberty International Airport to “help minimize excessive delays and improve on-time performance” for all carriers, the company said.
The cut, which is 12% of the airline’s schedule at Newark Airport, an important hub for United, affects only domestic flights and the airline is not leaving any market. Shares were down 2.5% to $35.81 on Thursday.
Flight cancellations have been widespread in the industry. Steve Reynolds, CEO of Tripbam, which helps companies manage travel bookings, says “we’ve heard from several customers that cancellation is a problem.”
This is “starting to affect the recovery of business travel as travelers don’t want to pay a high price for a stressful trip,” he adds.
As of 4:00 pm Thursday, the FlightAware website said there were 758 domestic, to and from the US flight cancellations, up from 1,412 for the entire Wednesday.
Bad weather and downsizing of air traffic controllers have been cited as the causes of disruptions to air travel. However, a shortage of pilots is a key driver behind the rise in flight cancellations, says Michael Derchin, a longtime airline analyst.
“You end up with the perfect storm with a huge shortage of pilots,” says Derchin, founder of Derchin Airline Research.
He notes that many senior pilots retired early at the start of the pandemic. Larger airlines typically recruit pilots from smaller regional airlines, he said, adding that this has “created a big shortage among regional airlines.”
At an investment conference last month, Andrew Nocella, United’s commercial director, said he didn’t expect the pilot shortage to be eliminated any time soon.
“Retirement this year is about 1,800 pilots,” he said, adding that he expects that number to increase and “stay around 3,000 for the rest of the decade.”
This, in turn, creates “a significant gap in staffing for the next two to three years, which is really quite significant,” Nocella said.
The driver shortage is not limited to United…