The rise of Omicron puts a brake on the recovery of US companies

Uday Sampath Kumar and Praveen Paramasivam

(Reuters) – US airlines from American Eagle to United Airlines are poised to start the year warmly as the rapidly expanding Omicron variant threatens to slow the fragile rebound in growth by exacerbating supply chain problems and labor shortages.

COVID-19 vaccines and the reduction of last year’s reductions were a boon for companies seeking to recover from the pandemic.

But the rapid and relentless rise in Omicron-related infections has put pressure on companies ’sales and profits again.

Staff, customer traffic, and store hours have been hampered as daily infections in the United States have affected 1.35 million, the highest in the world.

The first signs of its impact on corporate America, for example, are the impact of corporate sales in recent weeks. American Eagle Outfitters (NYSE :), Abercrombie & Fitch and Lululemon Athletica (NASDAQ :).

“The time to tighten your belts as the fourth quarter unfolds and the uncertainty about the supply chain and anniversary stimulus in the first quarter will make the next few months volatile,” said MKM Partners analyst Roxanne Meyer.

Even the U.S. travel industry, a sector that has barely been able to recover, has been forced to cancel flights and cruises during the crucial holiday season due to staff shortages.

American Airlines (NASDAQ 🙂 Group Inc. expects the cost per seat available to increase from 13% to 14% compared to pre-pandemic levels, and United Airlines said it was reducing its short-term flight schedules to about 3,000 COVID employees. because they were positive. -19.

However, some companies have benefited. The pharmaceutical chain CVS Health Corp (NYSE 🙂 raised its earnings outlook for 2021 on expectations for higher demand for COVID-19 vaccines and over-the-counter testing. Abbott Laboratories (NYSE 🙂 expects its COVID-19 test sales to remain strong in the short term.