Delta Air Lines (DAL) on Wednesday said unvaccinated employees face mandatory Covid testing and higher insurance costs, while American Airlines (AAL) became the latest airline to warn that rising coronavirus cases had hurt demand. Airline stocks rose.
The airlines made the announcements after the FDA this week gave full approval to the Pfizer (PFE) and BioNTech (BNTX) Covid vaccine, a move that will likely prompt more businesses to establish vaccination mandates. And it follows United Airlines‘ (UAL) decision this month requiring U.S. employees to get vaccinated or face the threat of dismissal.
“I know some of you may be taking a wait-and-see approach or waiting for full FDA approval,” Delta CEO Ed Bastian said in a memo to employees. “With this week’s announcement that the FDA has granted full approval for the Pfizer vaccine, the time for you to get vaccinated is now.”
Meanwhile, Bastian said that starting on Nov. 1, unvaccinated employees that have Delta’s account-based health care plan face a $200 monthly surcharge.
“The average hospital stay for Covid-19 has cost Delta $50,000 per person,” Bastian said. “This surcharge will be necessary to address the financial risk the decision to not vaccinate is creating for our company.”
Bastian said that 75% of the airline’s employees are vaccinated. But in recent weeks, all Delta employees who went to the hospital with the disease were not fully vaccinated.
He added that unvaccinated employees must also wear masks in all indoor company settings “until community case rates stabilize.”
Also, starting on Sept. 12, any U.S. employee who isn’t fully vaccinated must take weekly Covid tests. And starting on Sept. 30, Delta will only give pay protection to fully vaccinated staff who have a breakthrough infection.
American Cites ‘Softness’
American Airlines, during a conference on Wednesday, also said that sales this month were “trending below our previous internal forecast.” But it said it wasn’t yet prepared to change its flight capacity or financial forecasts.
“Passenger demand and revenue in July was better than we had estimated,” Chief Revenue Officer Vasu Raja said at the conference. “However, the recent uptick in COVID cases and related headlines has created some softness in close-in bookings with a corresponding increase in close-in cancellations.”
Raja said that demand trends for the holidays remained “incredibly strong.”
Airline Stocks Rise
The rise of the delta variant has sent airline stocks lower and jeopardized the industry’s rebound, after states re-opened their economies and many people, initially, got vaccinated. Leisure travel came back. But executives warned that corporate travel could take longer, with many people still working from home.
But the U.S. vaccination rate later slowed. And the coronavirus delta variant prompted a spike in cases.
Spirit Airlines (SAVE) last week also said it was seeing more cancellations and a slowdown in demand. The ultra-low-cost carrier attributed the trend to “rising case counts of COVID-19 and some amount of short-term brand impact” following a wave of flight cancellations brought on by harsh weather, staffing shortages and technical disruptions.
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