Can SAS Pull Off its Controversial Plan?

Pushing Back: Inside This Issue

The Wuhan coronavirus continues to spread, putting a virtual halt to parts of China’s economy. Airlines there are feeling the pain, with empty seats that would otherwise be crammed full with holiday travelers. Airlines elsewhere temporarily suspended much of their China flying, with demand eviscerated. Yet most will likely benefit financially, with this lost demand outweighed by the virus scare’s thunderous impact on oil prices. In early January, Brent crude oil prices came close to hitting $70 per barrel. They open this week below $60.

Japanese carriers have their own international problems to confront. But helpfully, both ANA and JAL produce more revenues domestically than they do internationally. And at home, trends were more favorable.

Not more favorable though, than capacity trends in Europe, where Wizz Air continues to thrive as it expands at a 20% clip. India’s IndiGo is likewise growing 20%, extending its reach internationally as it contemplates even longer-range intercontinental flying. Will it again be interested in Air India?

In the U.S., Alaska is climbing out of a momentary funk while Hawaiian keeps margin declines to a minimum amid Southwest’s attacks. Allegiant trumpeted an unequivocally successful transition to Airbus planes. And American finally struck a contract deal with mechanics… subject to ratification.   

Verbulence

“We are really serious about our mission of building the best transportation network in the world for India”

IndiGo CEO Ronojoy Dutta

Earnings

October to December (3 Months)

• ANA: $269m; 8%
• Japan Airlines: $230m; 11%
• IndiGo: $70m; 8%
• Alaska: $181m; 11%
• Hawaiian: $50m/$46m*; 9%
• Allegiant: $61m; 20%
• SkyWest: $73m; 17%
• Wizz Air: $24m/$25m*; 5%

Net result in USD; operating margin

Net profit excluding special items (all operating figures exclude special items)