Issue No. 752
ANA's Challenge to JAL
Pushing Back: Inside This Issue
The week begins with China taking drastic steps to curb a spreading flu virus — one such step was temporarily banning all group tours. For Chinese airlines, what was supposed to be the busy Spring Festival travel peak has become a nightmare of cancelled trips and empty jets. Airlines elsewhere are monitoring the situation closely, hoping health officials can prevent another SARS-like industry disruption.
Speaking of industry disruptions, none right now is as significant as the B737 MAX crisis, upending the business plans of carriers like United, American, and especially Southwest. Still, all three carriers earned solid profits in the closing quarter of 2019, thanks chiefly to robust domestic demand. American again lagged its peers, pledging to do better in 2020 with help from initiatives like more flying from its best hubs. It couldn’t resist however, expressing a little jealously about Delta’s monstrously profitable Atlanta hub.
Is easyJet monstrously profitable? That’s probably too strong a word. But its latest update suggests demand within Europe is no less strong than it is within the U.S. Just as importantly, both markets face supply constraints because of yes, all those grounded and never-delivered MAXs. Like Delta, easyJet isn’t a MAX customer, which helps for the moment. That said, both face frustrating Airbus NEO delays. Ditto for JetBlue, which posted decent Q4 margins but not good enough to dispel the hypothesis that it’s forever destined to underperform other U.S. LCCs (and Alaska and Hawaiian too, based on recent history).
Finally some good news for Boeing: The first B777-X performed its first test flight. Good news for Germany’s Condor too: LOT Polish will buy it. Bad news though, for South African Airways, whose cash situation looks increasingly desperate.
“I do not agree that the MAX crisis compels us to acquire another carrier. We would not overpay.”Southwest CEO Gary Kelly
October-December (3 months)
- American: $414m/$502m; 8%
- United: $641m/$676m; 9%
- Southwest: $514m; 12%
- JetBlue: $161m/$162m*; 11%
Net result in USD; operating margin
Net profit excluding special items (all operating figures exclude special items)