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'The patient is still in intensive care,”: Airlines For America CEO on airline industry recovery

Airlines For America CEO Nick Calio joined Yahoo Finance Live to break down the recovery of the airline industry and when investors can expect the travel industry to bounce back completely.

Video Transcript

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ADAM SHAPIRO: Airline stocks under pressure today, but yesterday, Delta, United, Southwest, American, they all hit 52-week highs, as the reopening trend has continued to help benefit the airlines. Let's bring in Nick Calio. He is Airlines for America president and CEO, trade group that represents most of the carriers here in the United States. Nick, it's good to have you here. And before we dive deep into the numbers, how would you describe where we stand at this moment in time with the airline recovery?

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NICK CALIO: The patient is still in intensive care, to be honest, Adam. You've seen a lot of anecdotal reports of a lot of travel. We had our best weekend in over a year this past weekend. All that's good news. With that said, we're still flying 50% less people than we used to at this time a year ago.

SEANA SMITH: Well, Nick, with that in mind then, I think there was a lot of optimism once we got the numbers that we did yesterday from a lot of these big airliners. But when you take a look at the trend, or maybe the lack thereof, are you confident that this rally does have legs? Or could we likely see another pullback here after the spring break ahead of the summer?

NICK CALIO: The one thing we've learned throughout the pandemic, Seana, is that you can plan, but you can't forecast. Our hope is that we're going to continue to see this uptick in the numbers. We see a really high pent-up demand to travel. People want to get out. They're feeling more confident when they learn about how safe you are on an airplane, as more people get vaccinated. So we believe it is sustainable. But again, it's hard to forecast. This virus has been very tricky. And we're hoping that we're making real progress against it. If that happens, the numbers will stay up.

ADAM SHAPIRO: And one of the ways we saw that was in Delta, which filed an 8-K yesterday with the SEC, and they said, quote, "Domestic demand improving across the booking curve. Bookings for travel departures beyond 60 days represent 32% of new bookings, and that's down only three points from 2019." When you speak to the CEOs at the airlines, whether it's Ed Bastian at Delta or the others, what are they telling you about we know the virus can be tricky, but are they worried the government might gum things up with new regulations?

NICK CALIO: That's always a concern when you're in the airline business. As you know, we're one of the most heavily regulated businesses in the world and certainly in this country. But so far, the government's been a very good and very willing partner. They know how much we drive demand, how we can help empower recovery. And they basically used the airlines as the unemployment office for the federal government for airline employees, which is important because as that demand picks up, we need to have our front line employees available.

And airline employees are different than many others. Not to say they're any better, but they are required to undergo constant training, retraining, certification and recertification. So you can't lay a pilot off for two months or three months, throw them the keys to the airplane, and say you're flying Friday. It has to be all retrained and recertified to make sure that we are as safe as we possibly can be.

SEANA SMITH: Nick, one trend that we have seen is that people seem to be close-- booking closer to when they're actually traveling. And that, of course, is different than some of the trends that we were seeing before the pandemic. To what extent, though, does this put some of the airlines at a disadvantage when you take a look at the fact that they simply can't schedule like they used to be able to before the pandemic?

NICK CALIO: Well, here we can plan. And we have been doing that. So what you find are some flights are crowded, a lot of other flights are nearly empty. But to meet the demand, we have to have the capacity available. That's kind of a bet in the sense that if you have the seats and they get filled, you make money. If you have the seats but don't fill them, you lose money or lose more money.

ADAM SHAPIRO: In fact, Nick, I think Delta is the only airline that still blocks the middle seat. They're going to revisit that by the end of April. But going forward, we have no reported cases of a super spreader event from the airlines. So when the CDC recently said, don't travel, yet they were saying you can have small gatherings among vaccinated people, did they miss something?

NICK CALIO: Well, look, the CDC is doing their best to do their job. We have a disagreement about the safety of air travel. People have to be smart about it. And what we tell people, we try to give our potential passengers as much information as they can possibly have so they can make an informed judgment about whether they want to get on an airplane. And since the early times of the pandemic, as you know, Adam, we have been leaning into the science and the data.

We got together with a group of aviation stakeholders. We went to the Harvard School of Public Health, its National Preparedness Leadership Institute, to ask them to take a look at all the science and data that was out there to work with manufacturers, airlines, airports, other stakeholders. Get all the information possible, do their own modeling, as well as what US Transcom had done and all the modeling we were doing.

The end result was an independent report. They said that all the multilayers of risk mitigation that we put in place-- our air filtration systems are better than in operating rooms. The face mask requirements, the health declarations, the enhanced cleaning and disinfection, the new boarding and deplaning procedures, and based on the Harvard recommendation, how we run the air and when we run the air during deplaning and boarding, all add up to it being safer-- it being airline travel-- being safer than most routine activities, including going to a grocery store, a library, a restaurant, a bar, and having people into your own house, actually.

ADAM SHAPIRO: All right, we wish everybody at Airlines for America the best. Nick Calio is the president and CEO. Thank you for joining us.