Another Virgin Lost

Pushing Back: Inside This Issue

Let’s start with a bit of good news for a change. Jet2.com, a British LCC, says people are now booking holidays for late summer and beyond. Air Arabia and Etihad are moving forward with a new low-cost venture. Ditto for Japan Airlines. More major carriers, including Air France/KLM, now have government support that buys them at least a few more months if not quarters of survival, even absent any revenue. Several low-cost carriers expressed tempered optimism about leisure and family-visit traffic recovering — partially, anyway — by yearend. One of those low-cost carriers, Mexico’s Volaris, even reported a first quarter operating profit.

These are some faint examples of green shoots amid what unfortunately remains a horrifically bad situation overall. Delta, reporting its first Q1 operating loss in almost a decade, has an enormous war chest of cash now, yes. But to build it, the airline had to borrow billions of dollars, mortgage much of its asset base, and surrender a potential ownership stake to its government. It wouldn’t be surprised if the industry took three years to fully recover. 

So it will be a smaller global airline industry in the foreseeable future, as Aeromexico, Lufthansa, United, and others have joined Delta in suggesting. Virgin Australia will surely be smaller, if it survives at all after filing for bankruptcy last week. Air Mauritius filed for bankruptcy too. The fate of South African Airways, already in bankruptcy before the crisis, hinges on labor concessions. Norwegian’s fate could be determined at a shareholder meeting next week.  

This week, more earnings, or lack thereof, from most major U.S. carriers. They’ll talk more about matters of survival, but maybe too shed a few more glimmers of hope.

Verbulence

"We're prepared at Delta…We've got the liquidity. We've got the balance sheet strength. We've got the resiliency of our people, and our brand. We'll get through this. It may take several years to get through it, but we will get through it.”

Delta CEO Ed Bastian

Earnings

January-March (3 months)

• Delta: -$534m/ /-$326m*; -5%
• Aeromexico: -$126m; -13%  
• Volaris: -$75m/$17m*; 4%

Net result in USD; operating margin
*Net profit excluding special items (all operating figures exclude special items)

Webinar

Watch a recording of Skift Airline Weekly staff discussing this issue and taking questions from readers.