Airlines resume flights to the US after 5G network activation 0:43
New York (CNN Business) --
Airline executives breathed a sigh of relief to their investors Thursday, saying they believe the threat to their operations from the rollout of 5G technology is behind them.
Although AT&T and Verizon only agreed to temporarily delay the rollout of 5G at major airports, the CEOs of American and United said there will now be a resolution to the dispute without thousands of flights being delayed, diverted or cancelled.
Earlier this week they had predicted those dire consequences.
"It took us a while to get to the right point, but I think we're there," said Doug Parker, CEO of American Airlines.
"I don't think you're going to see any future material disruption from this."
"As much as I wish it would happen sooner, the good news is that we now have the whole world engaged, the FAA and DOT at the highest level, the ... aircraft manufacturers, airlines and telecommunications," said Scott Kirby, United's CEO.
"Although we still don't have a definitive resolution, I am confident that we will get it."
This is how Europe deployed the 5G network without affecting aviation
The Federal Communications Commission (FCC) auctioned off C-band spectrum to US wireless companies last year, an $81 billion sale that would allow them to offer stable and lucrative 5G network service. But airlines soon began warning that the use of such technology near airports could interfere with aircraft radar altimeters, an instrument that tells pilots how high their plane is above the ground. Altimeters are crucial for landing aircraft in low visibility conditions.
This could have resulted in a widespread, ongoing and costly disruption to flight schedules, potentially delaying tens of thousands of flights a year.
It could have cost billions of dollars in a sector that has lost tens of billions in the last two years due to the pandemic.
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Canceled or delayed flights, whatever the cause, are expensive.
Just two weeks of outages during the recent holiday travel season caused by understaffing due to omicrons and bad weather cost Delta $80 million.
This had the potential to create disruptions to flight schedules not seen in decades.
International airlines suspend some flights to the US amid 5G uncertainty
After a couple of temporary 5G network service delays, the White House and telcos reached an agreement this week to delay rolling out the technology near airports until there can be a consensus on how to address the potential issue. .
Telecommunications companies did not seem very pleased with the truce.
"We are frustrated by the FAA's inability to do what nearly 40 countries have done, which is to safely deploy 5G technology without disrupting aviation services, and we urge it to do so in a timely manner," Megan Ketterer, AT&T spokesperson.
(CNN is owned by AT&T.)
But airline executives expressed confidence that a deal would be reached soon enough to satisfy all parties.
"The technical experts who are working on it tell us that it really isn't that complicated once everyone is able to share information and work on it," Parker said Thursday. "So they seem to be hopeful that we'll be able to address this in a way that allows for full 5G deployment, even near airports. I don't expect anything to be deployed near airports until we get to the point where everything the world feel really comfortable, because nobody wants to go through this again.
There are still some problems for regional airlines that fly smaller planes, such as American Eagle, Delta Connection and United Express.
Faye Malarkey Black, president of the Regional Airline Association, said her members are still waiting to see what poor visibility rules will apply to their flights.
"Regional aircraft manufacturers have submitted those same plans to the FAA," Black told CNN.
"They have not received a response. We do not know when they will receive a response."
However, after several U.S. international airlines suspended their flights due to concerns about the 5G network, most of those flights have resumed.
A new problem is the last thing airlines needed
5G had been shaping up to be the latest massive problem for a sector that has been dealing with one massive problem after another for nearly two years of the pandemic.
American, United and Delta have reported combined losses of $36.5 billion, excluding certain special items, since the start of 2020. Southwest, which had gone 47 years without an annual loss, is poised to report its second consecutive annual loss next year. week.
But hope may be on the horizon for US airlines.
Despite the increase in infections from the omicron variant of the coronavirus, airlines say that there are good levels of reservations for this year's spring break period and remain hopeful of a strong summer.
Most project a return to profitability in 2022.
Domestic leisure travel is almost back to pre-pandemic levels, although business travel remains lower than it was before the pandemic.
American said Thursday that travel by small and medium-sized businesses is at about 80% of what it was before the pandemic, and travel by large corporate customers was still 60% lower.
What is happening with 5G and airlines in the United States?
Still, the timing of the omicron surge actually came at the best possible time for airlines, despite the problems it caused during the holidays, said Philip Baggaley, chief airline credit analyst at Standard & Poor's.
"It was bad that it came over the holidays, because it messed up operations," he said.
"But since these were vacation plans that were already made, the passengers went ahead. The demand was there."
And January and February are historically the slowest time of year for air travel, so the impact on bookings is limited, he said.
"The next six weeks were a lost cause anyway," he said.
However, Baggaley pointed out that on previous occasions during the pandemic, airlines seemed on the verge of changing course, but it was getting out of hand.
"I think the expectation of a rebound in stocks in the spring and summer and a return to profitability is a reasonable scenario," Baggaley said.
"But many other things can happen."
Among the concerns of the airlines is the possibility of another variant that again cuts the demand for air travel and the new restrictions on international flights.
They also face uncertainty over rising fuel costs, the second biggest cost to airlines after wages and benefits.
And they face higher labor costs as they prepare for negotiations with their unions, many of which have angry members who complain they are at a breaking point after two very difficult years.
So the lull in the 5G battles is relatively rare good news for the aviation industry that really didn't need any more bad news.
-- CNN's Pete Muntean and Gregory Wallace contributed to this report.
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