Issue No. 755
Alaska-American, That's What Friends Are For
Pushing Back: Inside This Issue
How long will it last? The Covid-19 virus outbreak, if contained soon, might prove just a painful but manageable disruption for China’s pummeled airlines, not causing any long-lasting damage. But with each passing week of grounded aircraft and empty flights, the crisis is looking more and more like a demand shock of 9/11-like proportions. As it lingers on, moreover, the hurt will spread to more foreign airlines, and perhaps the global economy itself.
The virus is already a huge concern for Singapore Airlines, threatening to derail a profit improvement drive that was gaining momentum. The virus is likewise a big concern in Korea, where airline earnings momentum was already going in the wrong direction.
Norwegian took a major step in the right direction this summer, earning healthy profit margins. But it proved unable to avoid a heavy loss in the offpeak final quarter of the year. Carriers in Latin America are both frustrated and bolstered — in terms of unit revenue growth — by their missing MAXs. Aeromexico and Copa, despite their grounded planes, both saw a big jump in Q4 margins. Low-cost carriers, meanwhile, are becoming the new stars of the Arabian Peninsula. Just as Air Arabia was announcing tremendous Q4 profits, Qatar Airways was announcing the closure of Air Italy. In the U.S., a former Allegiant chief is progressing in his mission to start a new airline. On the other side of the world, Qantas is pressuring its pilots to make a deal on ultra-ultra-longhaul flying.
And the biggest strategic news of all last week: American and Alaska have found a way to get along. They’ll form a close partnership that elevates the standing of both carriers in the eyes of west coast frequent fliers. It’s a way for American, furthermore, to add new west coast intercontinental flying. It’s a way, furthermore, for American to strike a mighty blow at its wily nemesis Delta.
I think one thing is very clear. Without tourism, inequality in the world would be bigger. In most of the countries, we are the biggest investors.TUI CEO Fredrich Joussen
Net result in USD; operating margin
- Singapore Airlines: $239m; 10%
- Asiana: -$195m/-$286m*; -16%
- Norwegian: -$206m; -13%
- Aeromexico: -$3m; $37m*; 10%
- Copa: $2m/$92m*; 16%
- Air Arabia: $54m; 17%
- Jazeera Airways: -$4m; -13%
- Jeju Air: -$37m; -$54m*; -15%
- Mesa Air: $11m; 15%
- Chorus/Jazz: $28m/$19m*; 15%
*Net profit excluding special items (all operating figures exclude special items)