Issue No. 764
The 2020 'Pancession'
Pushing Back: Inside This Issue
It’s a pandemic. It’s a recession. A "pancession?" By whatever name, the Covid-19 virus is destroying both lives and livelihoods. For airlines, it’s destroying both supply and demand. When will it end?
The Chinese domestic market offers glimmers of hope as carriers slowly restore flights, flights slowly fill with travelers, and travelers slowly return to top tourist sites. Signs of life are flickering in the Korean domestic market too. In Europe, leading low-cost carriers are moving beyond mere cash husbandry and contemplating strategies to win the future, even if that future involves deep discounting, new public health regulations, and even bans on selling middle seats. U.S. carriers, meanwhile, finalized arrangements for the federal aid they’ll need to meet payroll through September. Beyond that, some see a dark world of downsizing.
Downsizing would mean fewer workers. And it would also mean fewer planes, prompting more Boeing customers to cancel B737 MAX orders. Gol doesn’t want as many. Neither does the leasing giant GECAS. The aircraft market could weaken further if several major carriers fighting for life don’t make it — carriers like Norwegian, South African Airways, and Virgin Australia. Virgin Atlantic too, isn’t getting the support from London it claims to need.
Europe and the U.S., hoping the worst of the epidemic is over, are plotting a gradual reopening of their economies. But air travel won’t be among the first activities to revive. In fact, given the difficulties of social distancing at 30,000 feet, it might be one of the last. The entire airline business has thus become a game of who can hold their breath the longest before oxygen — in other words revenue — finally returns.
That’s a sobering thought to begin first quarter earnings season, which kicks off this week. Delta will be among the first to detail the carnage.
"We remain focused on doing what is right for the company for its long term health and to ensure we are in a good position to resume flying when the pandemic is over."easyJet CEO Johan Lundgren
Upcoming Q1 Announcements
- Delta: April 22
- Aeromexico: April 22
- Volaris: April 23
- Southwest: April 28
- Air China: April 29
- Finnair: April 29
- China Eastern: April 29
- Lufthansa: April 30
- Air Canada: May 4
- Gol: May 4
- Air France/KLM: May 7
- IAG: May 7
- Azul: May 7
- SkyWest: May 7
- Ryanair: May 18
- Norwegian: May 28
Mondays Live With Skift Airline Weekly
Starting Mon., April 27, join Skift Airline Weekly editors every Monday morning at 11:30 a.m. Eastern for a discussion on the week's issue and what lies ahead for the airline industry. We'll take your questions live and will post the recorded session for subscribers to access all week. Stay tuned for registration details.
- Gol, one of Boeing’s most important B737 MAX customers, reached an agreement with the manufacturer on compensation for the aircraft’s lengthy service disruption. The deal includes an unspecified amount of cash, and also the cancellation of 34 orders. Gol now has 95 MAXs on order, down from 129. But the Brazilian low-cost carrier emphasized that it “remains fully committed” to the MAX. Gol has seven MAX 8s already in its fleet and was supposed to have received 25 more last year. Some of its orders are for MAX 10s, the largest version of the plane.
- Boeing got an even bigger blow from GECAS, one of the industry’s largest aircraft lessors. The unit of GE terminated orders for 69 undelivered 737 MAXs. It still has 82 on order, and 29 already in its possession. Earlier this month, the lessor Avolon cancelled 75 MAX orders, underscoring the pessimism pervading the aircraft market.
- The A350s previously part of Latam’s order book are now part of Delta’s order book, the result of a deal negotiated when the two formed an alliance last year. Delta, though, Reuters reports, is in active discussions with Airbus about deferring some orders. As a reminder, the widebody market, and especially the larger widebody market, was weak even before the current Covid crisis
- How weak is it now? Longtime aviation banker Bertrand Grabowski tells the Seattle Times that airlines can now buy a 10-year old B777-300ER for “no more than $50m.” That’s a big discount from pre-crisis prices, and far less than $200m-plus Grabowski said it would cost to buy a B777-X, even after the substantial discounts many airlines typically get.
- Fortunately for United, BOC Aviation is still willing to buy both widebodies and narrowbodies. The U.S. giant sold six B787-9s and 16 B737 MAX 9s to the Singapore-based lessor, which is owned by Beijing-based Bank of China. BOC surely got its planes at a heavy discount from what they were worth a few months ago. But United is trying to raise cash in any way it can right now.
- WestJet is laying off 1,700 pilots due to a collapse in demand, especially in cross-border traffic with the U.S. The layoffs, which WestJet called a “last resort,” will affect pilots at mainline, Swoop, and WestJet Encore, with 700 layoffs expected May 1, and the balance on June 1.
After the layoffs, WestJet will have just over 500 pilots on its roster, and they will be distributed among the carrier’s main bases at Toronto, Calgary, Vancouver, Hamilton, and Edmonton. WestJet earlier this month announced it would lay off half its 14,000 employees but then said it would re-hire more than 6,000 with the help of the Canadian government’s wage support bailout package.
- U.S. labor unions are warning that Treasury’s decision to make some CARES Act funds available as loans, not grants, means airlines will have more leeway to furlough employees. The Air Line Pilots Association said it is confident “that Congress will seek to overturn the constraints placed on this worker assistance program,” and will continue to appeal to lawmakers on this front.
The Association of Flight Attendants said it pushed Congress and the Treasury to beat back some of the more “onerous” terms of the initial bailout. “We have seen what happens when investment bankers like Secretary Mnuchin control the outcomes, and we’re going to make sure that doesn’t happen again,” said AFA President Sara Nelson.
Transportation Department outlined its plans to disburse $10b in federal aid to
U.S. airports. The airport industry successfully lobbied lawmakers to be
included in the CARES Act, but the law left it to the executive branch agencies
to disburse the funds. As recently as last week, the formula for distributing
funds — in other words, which airports get what— was still being determined.
FAA’s Office of Airports will handle the funds, the Transportation Department said. DOT determined its distribution by increasing Airport Improvement Program (AIP) grants by 100% and adding supplemental grants based on plans already in motion during this fiscal year. The largest single grant went to the country’s busiest airport Atlanta, which will receive $338m.
Other notable recipients include: Los Angeles ($323m); Dallas DFW ($299m); Chicago O’Hare ($294m); Denver ($269m); San Francisco ($254m); Miami ($206m); New York JFK ($193m), and New York LaGuardia ($103m). The Transportation Department says the funds are to be used for capital expenditures, payroll support, and debt repayments.
Gensler Sees Airport Architecture Changing After Covid
airports be the same after the Covid pandemic ends? Probably not, says Ty
Osbaugh, who leads architecture firm Gensler’s aviation practice. Even after
the pandemic subsides, Osbaugh believes airports will need to account for more
space for social distancing. Security lines, gate hold areas, and check-in
counters all will have to be rethought. “We will have to de-densify airports,”
In the near- and medium-term, airports might consider moving some check-in and pre-departure checks to adjacent garages and parking facilities. These could include ticketing and printing boarding passes as well as temperature and health checks. Security may have to be timed, so that passengers are given a block of time to report to security. Airlines should deploy technology to allow passengers to disperse throughout the terminal, rather than waiting for flights at crowded gate-hold areas. In the long-term, the way airports are built will change, Osbaugh believes.
Most U.S. airports are hemmed in on the airside by the airfield and on the landside by parking garages and access roads. But most terminals in the U.S. are two levels, unlike airports in Europe and Asia, which often are more compact but occupy several levels. This may be the key for future terminal construction or retrofits in the U.S., Osbaugh argues. Spreading the terminal functions over many levels naturally de-densifies the airport, he said.
Other changes that Gensler believes could result from this pandemic is the way duty free, food and beverage, and shopping concessions are laid out, once again to de-densify the facility. Medical clinics, now often inconspicuous in the U.S. when they exist at all for the public, will be more central in airport design, Osbaugh said
Council International (ACI), a trade and advocacy association for airports,
published a “comprehensive toolkit of solutions” for governments to help ensure
airports are able to survive the Covid crisis and ultimately recover from it. The
gravity of the crisis is clear, with worldwide passenger traffic expected to
decline by almost 40% this year, with airport revenue falling by $77b.
ACI specifically gives six policy recommendations, the first of which airlines won’t like — it wants governments to maintain airport charges and fees so that facilities have the money they need to operate. It does, however, want airport rents to be waived, and taxes to fall. Suspension of slot usage rules should be temporary. Charges and fees for cargo airlines should remain. And governments should provide wage subsidies, grants, and credit help, in a way that doesn’t benefit certain parts of the aviation ecosystem more than others.
- Who’s bothering to negotiate airline alliances at a time like this? Finnair is, with China’s Juneyao Airlines. The two announced a joint venture last week, covering the Shanghai-Helsinki route that both of them serve — when there’s no global pandemic, anyway.
Finnair and Juneyao already codeshare, but now they’ll jointly plan flights and share revenues as well. Never mind that Finnair is a oneworld member and Juneyao is associated with Star (and in an equity tie-up with SkyTeam’s China Eastern).
Miles for Sheltering-in-Place
Russia’s S7 points for the most creative lockdown-era marketing move.
The carrier’s “Fly at Home” promotion grants loyalty plan members 100 miles for
every day they remain at home during the crisis.
To qualify, members must visit the S7 website each day and prove (via geolocation) that they’re in the same place by clicking a button labeled “I’m at home.” The miles earned can even be used toward achieving elite status. All miles earned, via this promotion and otherwise, will remain active through the end of 2021.
Championing the public health effort, S7 writes: “The best that each of us can do in the fight against the pandemic today is to limit our movements and stay at home. Traveling will return to our lives again.”
- For Sabre, 80% of its
revenues are directly tied to air traffic transaction volumes. You can then
figure out just how difficult things are for the company right now. Gross
bookings declined by 8%, 17% and 70% y/y, in January, February and March 2020,
respectively. And “significant cancellations created a substantial additional
negative impact on our net bookings, defined as gross bookings less
Net bookings were actually negative in March, though it sees cancellation rates declining for April and May. Separately, Sabre’s planned acquisition of Farelogix, while receiving antitrust clearance in the U.S., did not get such clearance from U.K. regulators. Both countries issued lengthy reports summarizing their investigations and chronicling changes now unfolding in the airline distribution landscape.
Traditionally, airlines pay GDSs booking fees, and GDSs in turn share part of their fee proceeds with travel agencies via incentive payments. But as Skift’s Sean O’Neill explains, a new “wholesale” model is emerging whereby airlines pay incentives to travel agents, and travel agents pay booking fees to GDSs.
The trend stems from airline efforts to take control of the precise offer that each of its customers see — what they’ll pay, how they can upgrade, what their seat will look like, whether inflight Wi-Fi is included in the fare, and so on.
- The assessments keep getting gloomier. IATA, for the fourth time since the Covid crisis started, gave an updated estimate of how much airline passenger revenue will likely disappear this year. On Feb. 20, it said $29b. On March 5, its worst-case scenario was $113b. On March 24, that rose to $252b. And last week (April 14), IATA said no, airline revenues will in fact drop a massive $314b, or 55% from last year’s level.
This partly reflects the nearly 80% y/y drop in scheduled flights this month, a decline that would be even sharper if not for the still-sizable number of empty planes flying in the U.S. domestic market. Some markets in Asia too, led by China, are still somewhat active with domestic flying.
The evisceration of so much revenue also reflects schedule cuts planned for the next several months, as airlines lose hope that demand can recover by the peak northern summer months of June, July, and August. It also reflects an expected halving of global traffic this year, measured by RPKs. Yields will be lower too.
And finally, the latest IATA assessment reflects a world economy in depression, or something akin to one. As bad as the 2008-09 global financial crisis was, IATA said, the current pancession could be twice as bad in terms of lost output. In 2019, by the way, 58% of all passengers worldwide were flying domestically (the seven biggest domestic markets are the U.S., China, India, Japan, Brazil, Russia, and Australia).
These domestic passengers, however, represented just one-third of total 2019 RPKs, which take distance into account. That’s a more relevant metric for airlines because RPKs is more closely correlated with revenue. A passenger flying from Sydney to Los Angeles, after all, will produce more revenue than a passenger flying from Sydney to Melbourne.
Looking ahead, domestic markets appear poised to reopen first, as is the case now in China. A lifting of restrictions on international flights will take longer, especially as Asian countries like China, Korea, Japan, and Singapore encounter new Covid cases imported from abroad. Even as late as Q4, IATA expects RPKs to be one-third lower than they were during the same quarter last year.
Is cargo demand helping? A bit, but for most airlines, it’s just a small portion of total revenues. And besides, the World Trade Organization (WTO) expects international trade to fall by 30% this year.
What’s IATA working on now? Aside from maintaining pressure on governments to support their airlines financially, the trade group is urging regulators to allow carriers to offer their booked passengers vouchers instead of cash refunds, or failing that, cash refunds deferred for six to nine months, at which point the industry’s finances will hopefully be stabilized.
IATA will soon host regional videoconference summits with governments around the world, to discuss plans for reopening the industry. It compares the current moment to the waning days of World War II, when countries assembled to plan the framework of a post-war international airline industry. That gave rise to ICAO, the Chicago Convention, and IATA itself.
- After 9/11, governments reexamined security protocols for air
travel. Ultimately, that led to more rigorous passenger and cargo screening at
airports. The U.S. federalized its airport security workforce. Only ticketed
passengers could enter the boarding area. Cockpit doors were fortified.
Passengers couldn’t congregate aboard planes. Air marshals patrolled the sky.
Security officials made better use of intelligence and screening technology. Programs
were created to expedite screening for “trusted travelers.”
The question now is how will air travel protocols change in the wake of a global health pandemic. One potential change in particular, is getting a lot of airline industry attention. To ensure safe social distancing, carriers might be mandated to block middle seats, which means no revenue for one out of every three seats on A320 or B737-family airplanes. The practice would decimate the economics of the industry, which rewards carriers that maximize their passenger counts per aircraft.
The only reason not to offer the most seats possible, is the expectation that some passengers will pay more for better service, be it a lie-flat seat or additional legroom. Preventing airlines from selling one-third of their seats would mean all passengers would have to pay more to ensure profitability. The ultra-low-cost business model would be up in smoke. Fewer people overall could afford to travel. So the industry would be a lot smaller.
Of course, aircraft seating density isn’t the only factor determining unit costs — with extremely low fuel, labor, and/or aircraft prices, airlines could perhaps find a way to still make some money at 66% load factors, without charging excessively high fares.
- Just how bad is the pancession? The IMF, which calls it the
Great Lockdown, projects the global economy to contract 3% in 2020, assuming
Covid-19 containment measures peak in Q2 and recede in the second half of the
year. In 2009, during the heart of the global financial crisis, world GDP
shrank by just one-tenth of a point.
Not since the Great Depression that began in 1929 has the world economy experienced anything so traumatic. The IMF does expect a rebound in 2021 — global GDP should grow 6% next year as economies reopen. Still the cumulative loss of world output over 2020 and 2021 combined could amount to some $9t, which is greater than the economies of Japan and Germany combined.
And no country is spared, the group warns. Especially hard hit are countries dependent on travel and tourism (think Thailand, Mexico, Spain, and Turkey). Commodity exporters are another category of those in extreme distress (Mexico fits into this grouping too). Many of the most vulnerable are emerging markets now experiencing a rush of capital outflows and sharp currency depreciation as well. Many have relatively weak health systems with limited capacity to manage the pandemic. Many don’t have the fiscal wherewithal to provide government aid to their companies and citizens. Many entered the crisis already burdened with heavy debts.
As a result, more than 90 countries have already approached the IMF for financial assistance. Among the world’s biggest economies, meanwhile, the IMF sees U.S. GDP contracting 6% this year, the euro area nearly 8%, and Japan about 5%. It still expects China to grow but by only 1% (see chart).
- For its just-completed winter half (October through March), easyJet said it likely lost somewhere between $240m and $260m, excluding taxes and heavy one-off losses linked to wrong-way fuel and forex hedges. If that sounds like a rough winter, well, it was in fact a mostly good winter. A year earlier, easyJet’s wintertime pretax loss was $357m. Operating margin then was negative 11%. Its winter-half performance, keep in mind, can be heavily influenced by the timing of Easter, which sometimes falls in March and sometimes falls in April.
In any case, the LCC almost always loses substantial amounts of money during the winter half, always offset by much larger profits in the summer half. In January, before anyone knew of the economic carnage that lie ahead, easyJet delighted investors with talk of favorable supply and demand conditions.
Rival Thomas Cook had just passed away in the fall. Flybe was struggling. British Airways and Ryanair were recuperating from labor unrest. And Europe faced a capacity crunch as carriers flew without their grounded B737 MAXs and delayed A320 NEOs. easyJet’s own calendar Q1 ASK capacity shrank 5% y/y.
As things transpired, January and February were in fact strong months for easyJet. In the latter half of February, the Covid crisis began showing its ugly face in Italy, where easyJet was forced to cancel flights. March, of course, saw a whole other level of disruption as the epidemic spread throughout Europe. easyJet cancelled roughly 20,000 flights in March, costing it some $260m in revenue. Still, total revenues for the entire calendar first quarter increased nearly 2% y/y.
Note that Easter fell in the calendar second quarter, and thus the summer half, both this year and last year. There of course was no Easter travel rush this year, and nor will there be a summertime bumper crop of profits to offset last winter’s losses. The airline did say bookings for next winter season are coming in ahead of last year’s pace, partly because it put flights on sale earlier this year.
Many customers that were supposed to fly this spring, furthermore, are rebooking flights next winter using vouchers. More than half of customers with cancelled flights, in fact, are electing to rebook or accept credits for future use instead of asking for a cash refund. That’s important because cash is everything right now, as easyJet and every other airline in the world count how long they can hold their breath deprived of any oxygen, i.e. revenue. easyJet mercifully has a pretty large oxygen tank, capable of keeping it alive for perhaps another nine months of not flying.
That’s thanks to cost cutting, aircraft deferrals, and lots of new borrowing. More specifically, easyJet furloughed most of its workers through May (with government wage support), got others to take voluntary leave, deferred payments to suppliers and governments, suspended investments like IT projects, pushed back delivery of 24 NEO jets, borrowed $1.8b in three separate transactions (one with government backing), and raised another roughly $650m through aircraft sale-leaseback deals.
Unlike U.S. carriers mandated by Washington to maintain service to the cities they served pre-crisis, never mind near-zero demand, easyJet was able to completely ground its fleet on March 30, enabling it to save on variable costs like fuel, airport fees, navigation fees, ground handling, labor, maintenance, and sales and marketing. That said, some costs are fixed, so it’s still burning through $40m to $50m worth of cash every week.
If the zero-revenue situation were to last well into the fall, it could undertake additional measures to bolster its cash position, like deferring maintenance, extending furloughs, refraining from renewing aircraft leases, or asking for more government help. Half of its aircraft remain unencumbered too, which means they’d be available for use as collateral if it needs to do more borrowing. When demand does start to revive, management says flights could restart in as little as two weeks. But it acknowledges the possibility of having to refrain from selling middle seats.
Separately, easyJet’s management rebuffed the acrimonious calls of founder Stelios Haji-Ioannou, who’s calling for the carrier to unilaterally walk away from its deal with Airbus. Doing so, management argues, the cost of maintaining its fleet would spike, for it would lose access to warranties and need to purchase requisite software licenses, training, etc. directly from a single source supplier. And it would be legally liable to repay purchase discounts. easyJet will publish its winter-half results on June 30.
- easyJet’s rival Wizz Air likewise provided updated albeit much briefer commentary on its recent performance and current predicament. Wizz’s fiscal year ended in March, and net profit for the entire 12-month period (March 2019 through March 2020) was roughly $390m. This does not include heavy one-off accounting losses tied to fuel hedges.
Based on the earnings it reported for the first nine months of calendar year 2019, its result for 2020’s turbulent first quarter was something like a $50m loss. That includes the month of March, in which traffic dropped 34% y/y. Wizz is now flying just 3% of its pre-crisis schedule, producing a few crumbs of revenue operating government relief and cargo flights but otherwise dormant.
Encouragingly, it boasts of a strong balance sheet replete with about $1.7b in cash as of March 31. That gives it breathing space to endure a lengthy industry shutdown, and the time to ponder what the post-crisis world might be like. Sounding confident, Wizz still intends to grow capacity by 15% annually on average over the next few years. And its plans to launch Wizz Air Abu Dhabi remains unaffected.
These expansion plans are underpinned by a giant A321 NEO order, of which it hasn’t said anything about adjusting. It is, however, permanently cutting its workforce by a fifth, furloughing other workers, lowering executive salaries by 22%, lowering other staff wages 14%, renegotiating supplier contracts, and returning 32 older leased planes over the next three years. The fact that it’s permanently reducing its payroll, importantly, signals management’s expectations of a smaller European shorthaul market, at least for the next year or so.
Entering the crisis, remember, Wizz was one of the world’s most profitable airlines, using a hyper-cost-focused Ryanair-like business model but with Airbus rather than Boeing jets. As for the possibility of blocking middle seats, CEO Josef Varadi told Reuters he might do so regardless of regulatory requirements, just to ease passenger anxieties. It would mean a 180-seat plane becomes a 120-seat plane. That would of course negate a central plank of the carrier’s plan to depress unit costs. But it doesn’t completely negate the possibility of operating such planes profitability, especially if yields firm amid less competition.
Varadi also said he sees traffic exceeding 2019 levels not this year or next year but in 2022.
- Ryanair is preaching optimism in a time of ultra-pessimism. CEO Michael O’Leary, who early in the crisis said things should be fine by the summer, is no less pollyannaish now. Also speaking to Reuters, he said traffic recovery will be swift, albeit stimulated by “massive price dumping.” He’s even talking about perhaps buying more planes, echoing past downturns in which Ryanair secured extremely favorable B737 prices from Boeing.
Imagine what Boeing would give today to win some new MAX orders? As even the healthiest airlines worldwide approach their governments with a beggar’s bowl, Ryanair is loudly preaching against bailouts of carriers that weren’t even able to make money before the crisis. Essentially all of Ryanair’s flights are currently grounded, minus a few Dublin and London Stansted flights.
yet another European LCC that was doing well until the crisis hit, won’t let a
virus get in the way of promoting its holiday offerings. Not only is it
actively marketing packages for next winter. It’s now selling travel for summer
2021 as well. In fact, it’s planning service to six new Greek destinations.
Jet2 relies on older planes with lower fixed costs, an advantage right now. But will people feel ready to fly again by next summer?
- To nobody’s surprise, LOT Polish backed out of its
planned takeover of Condor, the German airline orphaned by the death of Thomas
Cook last year.
What now for Condor? Nationalization is one option for Germany’s different governments. In 2019, the carrier’s busiest markets were Frankfurt, Dusseldorf, and the Spanish resort Palma de Mallorca.
- China’s major airlines published their March traffic data, which for Air China dropped 74% y/y, in ASK terms. Its ASK capacity was down just 62%. China Eastern’s RPKs and ASKs shrank 79% and 69%, respectively last month. For China Southern, the figures were down 72% and 60%. Declines were steeper for international markets for sure, but both were down sharply. China Southern for example saw a 64% domestic RPK drop and a 90% international drop.
IATA last week said load factors on Chinese domestic flights were now up to about 60%. On the other hand, it’s not seeing a meaningful increase in flights or traffic nationwide, signaling a slow recovery. In general, the supply side of China’s manufacturing-heavy economy is reviving. But demand, from at home and abroad, is not. China’s Q1 GDP contracted 7% y/y.
Next week, China’s Big Three will report their Q1 financial results, which won’t be pretty. China Eastern, for its part, told investors to brace for “significant losses.” China Southern chose the words “substantial loss.”
- In Hong Kong, it’s utter despair for Cathay Pacific. First, street demonstrations. Then, a trade war. And now, a virus. And to think, it wasn’t that long ago when Hong Kong was thriving as a critical node in international commerce. Last month, Cathay and its Cathay Dragon subsidiary carried a mere 311k passengers, a y/y decrease of 90%. Even cargo was down sharply, by 36%. Passenger load factor was 49%, which would have been lower were it not for a wave of Hong Kong students and other residents retuning from the U.K. the U.S. and elsewhere abroad.
Declines were evident across all traffic segments: inbound, outbound, and transit. Cargo yields if not volumes were up as belly capacity across the world went away. Cathay continues to operate a full freighter schedule, carrying goods produced in newly reopened mainland factories. Hong Kong and mainland exports are in fact increasing, partly reflecting a surge in the transport of medical supplies like face masks, protective clothing, hand sanitizer, and pharmaceuticals.
But shipments of consumer goods like clothing and industrial goods like auto parts remain depressed. Ending its update with a sigh, Cathay said despairingly that it still doesn’t see any improvement in forward passenger bookings. The timeline of a recovery, it added, was “impossible to predict.”
- Might Korea be the second country in line to see some airline demand recovery, after mainland China? News reports from the country, widely praised for its handling of the pandemic, show that carriers like Korean Air and Jeju Air are adding back some domestic flights to meet springtime tourism demand to resort areas like Jeju island.
Domestic travel won’t help Korean Air much — it depends too heavily on still-dormant international demand. But LCCs like Jeju are more domestic-dependent. That said, if all of Korea’s airlines are throwing capacity at the lone market showing signs of life, ticket yields will be extremely low.
- As Reuters points out, Japan’s two largest airlines are still flying about half their normal domestic capacity, yet barely filling any of their seats. That makes them similar to their U.S. counterparts, also flying around empty planes domestically. ANA and JAL were flying more like two-thirds of their normal domestic capacity until late last week. Demand, they say, is just 10% of typical levels. Tokyo hasn’t announced any major airline relief programs, at least not yet. But ANA for one is asking for government-backed loans.
- The Singapore Airlines group, including its narrowbody
affiliate Silk Air and low-cost unit Scoot, filled just 57% of
its seats in March. On March 24, all non-resident visitors were barred from
entering Singapore, or even transiting through its airport. This month, the
group is operating less than 5% of its originally-planned capacity, with only
about 10 of its 200 planes still in service. The impact on its financial
performance, the company said, will be “severe.”
Having a dedicated freighter fleet is helpful, with demand for shipments holding firm amid a severe cargo capacity shortage. It’s even using some passenger planes for cargo-only purposes. But this doesn’t even come close to making up for its lost passenger revenue. Making the situation worse are expensive hedges for fuel it doesn’t even need anymore. This will lead to big accounting charges.
Singapore Airlines, however, won’t be going bankrupt anytime soon. It’s the recipient of perhaps the world’s most generous government aid package, amounting to some $13b. Much of that money will come as new equity that Temasek plans to buy; Temasek is the government wealth fund that already controls Singapore Airlines.
- Just last fall, Latam was celebrating a new partnership with Delta. Now it’s fighting for dear life as South America’s economies face an especially harsh fallout from the Covid-19 pandemic. Santiago Alvarez, a company executive in charge of Latam Colombia, told Reuters it has enough cash to last it only about three to four months. In March, Latam’s RPK traffic declined a relatively modest 38% y/y, with RPKs in Brazil down just 19%. In April, however, the airline is operating just a small fraction of its schedule.
Middle East/North Africa
- Emirates has rolled out a rapid coronavirus testing protocol for passengers leaving from its Dubai hub. First deployed on a flight to Tunisia, the program requires passengers to submit to a blood test for the novel coronavirus, with results ready in as little as 10 minutes. Emirates plans to roll out the program to other flights.
Neighbor Etihad said it will begin requiring touchless temperature screening — which includes screening for passengers with early symptoms of Covid-19 — at its Abu Dhabi hub.
- Etihad detailed its plans to return to service, cautioning that it will be some time before returning to full strength. The airline is currently operating 22 B787s and B777s, with five more aircraft in operational condition. These aircraft are being used to operate the carrier’s limited schedule, charter and special flights, and to carry cargo. Etihad plans to continue operating a limited schedule of passenger and cargo-only flights through June 30, at which it may start to re-introduce more passenger flights, depending on demand and if the Covid pandemic appears to be flattening.
- State-owned South African Airways, which entered the crisis in a bankruptcy-like restructuring state, is closer than ever to complete disintegration. Government aid is no longer flowing, reports News24 and Bloomberg News, leaving the airline little choice but to dismiss all of its workers. Talks with unions continue, which will perhaps yield an 11th-hour plan to salvage something of the airline. But SAA’s problems go far beyond high labor costs. Even in the best of times, it’s never been able to survive without taxpayer subsidies.
- The debate still
rages Down Under: Should the federal government rescue Virgin Australia?
Canberra did agree to pay Virgin and its healthier rival Qantas a
combined $100m in exchange for maintaining a limited amount of domestic service
for the next eight weeks.
But that won’t do much to help Virgin escape the jaws of bankruptcy. The state government of Queensland, home to Virgin’s Brisbane headquarters, is offering some money.
More interestingly, the airline appears to be on the investment radar screen of some private equity firms. And most interestingly, China’s Big Three — Air China, China Southern, and China Eastern — are reportedly potential candidates to rescue Virgin.
According local media, Virgin has tried but so far failed to secure a roughly $900m loan convertible to equity from the federal government. Does Qantas want to see its sickly rival disappear? Perhaps not, for becoming a monopoly provider would introduce some new risk factors in its relationship with regulators.
IMF’s 2020 GDP Forecast for Selected Countries
|Country||GDP Change Y/Y|
Source: International Monetary Fund
- Developing Asian Economies do better.
- Guyana highlighted for its growth surge, triggered by oil discoveries.
U.S. airlines, cushioned for now with federal aid, brace for a rocky recovery.
Like a sand castle washed away in the high tides, everything U.S. airlines built over the past 10 years is suddenly gone. Their muscular balance sheets. Their world-leading profit margins. Their resilient business models. Now, as they survey the ruins, all they see is a dystopian world of grounded planes, closed borders, dwindling cash, economic depression, and hundreds of millions of people confined to their homes.
But the dark days won’t last forever. This week, with the Covid-19 crisis still raging, U.S. carriers will start reporting their first quarter financial results. As they do so, they’ll give a clearer picture of current conditions and perhaps some visions of how and when the eventual recovery arrives. The unknowns still loom large. Can the economy bounce back quickly? Will people be afraid to travel on airplanes? What sort of new regulations will emerge to address public health at airports and aboard airplanes?
On the other hand, U.S. airlines now have clarity on one critical component of their survival plan. They now know what exactly they’ll be getting from Washington. On March 27, the White House signed the $2t CARES Act passed by Congress, which granted $25b in payroll support for passenger airlines, with another $25b made available for loans or loan guarantees. The U.S. Treasury, as it turns out, used its designated responsibility to protect taxpayers as justification for making some of the payroll grant money repayable. More specifically, airlines receiving payroll aid will need to pay back about 30% of what they receive, with interest, albeit at below-market rates. They’ll have 10 years to repay but can prepay sooner. The loans are unsecured, meaning no collateral need be posted.
Importantly, airlines must also provide Treasury with warrants, redeemable for company stock if the stock price rises over the next five years. In exchange for aid to Delta, for example, Treasury will have the right to buy its stock at the currently depressed price of $24 a share, which could mean a tidy profit for taxpayers if a recovery occurs and Delta’s stock price rises. If it does exercise its warrants, Treasury would have a roughly 1% ownership stake in Delta. These shares though, don’t come with any voting rights.
Any payroll grant money airlines receive, of course, must be used exclusively for wages, salaries and benefits. But their allocation of funds depends on what their payroll was during 2019’s second and third quarters, but not 100% of that amount. So it won’t be enough to totally cover 2020’s Q2 and Q3 payrolls. Keep in mind too that labor costs have risen this year — American for example just gave its mechanics a big raise. Hawaiian just did the same for its flight attendants. Ultra-LCCs like Spirit and Frontier, meanwhile, are disadvantaged by the amount of work they outsource — payroll grant money only applies to directly-employed workers.
More frustrating still for LCCs, especially those with limited service to many smaller markets, are rules that require aid recipients to maintain flights to all the cities they served pre-crisis. The Transportation Department, responsible for implementing this provision, has been mostly unwilling to grant carriers like Spirit and JetBlue exemptions. As a result, the U.S. skies are currently filled with empty flights to places like Joplin, Mo., and Sioux Falls, S.D. Even with fuel prices ultra-low and Washington footing much of the crew costs, airlines are losing money on these flights, and on pretty much all flights, actually. These losses are thus negating some of the federal aid they’re receiving. Bad public policy?
Other conditions for aid recipients include refraining from involuntary furloughs and pay cuts (through September), stopping all dividends and stock buybacks (until September 2021), and limiting executive pay (though March 2022). Regional airlines won some exemptions from various conditions.
Tough terms notwithstanding, the Treasury said more or less every major U.S. airline applied for the grants — it named American, Delta, United, Southwest, Alaska, JetBlue, Hawaiian, Frontier, Allegiant, and SkyWest. There was no mention of Spirit, Sun Country, or other regional carriers like Republic, though they likely just haven’t yet finalized terms, or at least hadn’t when Treasury made its announcement on April 14.
American will receive the most payroll grant money based on its 2019 Q2 and Q3 labor costs. It’s getting more than $5.8b, $1.7b of which will need to be repaid. Delta gets $5.4b. United $5b. Southwest $3.2b. Alaska and JetBlue just under $1b each. And so on. As mentioned about 30% of all money disbursed must be repaid. But what about that other $25b set aside for credit support? American for one said it would apply for about $4.8b of that money, which comes with similar strings attached, i.e. warrants, dividend and buyback restrictions, etc. Alaska said it would apply for $1.1b in lending support. One thing to keep in mind about government loan guarantees: Much of the money allocated for airlines after 9/11 wound up going unused. Warrants after 9/11 by the way, ultimately earned taxpayers a handsome profit.
Combined with billions raised from private-sector lenders, U.S. carriers have if nothing else bought time. They’ll at least be able to pay workers, maintain required levels of flight service, and meet their fixed cost obligations for the next few months without having to file for bankruptcy, even if revenues remain close to zero. Also critical to their short-term survival are the tens of thousands of employees voluntarily taking unpaid leave — some 35,000 people at Delta alone. Airlines are saving money in other ways too: cutting executive pay, shuttering airport lounges, suspending nonessential capital spending, scaling back work with third-party contractors, etc. And to be clear, even while meeting the DOT’s minimal service requirements, most U.S. carriers are flying just a fraction of their planned schedule this spring.
The rest of this spring, and probably the summer too, are a lost cause. Carriers are already pre-cancelling much of their planned flying as far out as August. A best-case scenario is by then, a sizeable portion of Americans can confirm they’re immune to Covid-19, if 1) they can test for that; and 2) scientists can prove that immunity is in fact bestowed on people who’ve already had it. Perhaps effective treatments or a vaccine will come sooner than expected. Perhaps there will be a testing system to ensure that all travelers are virus free before boarding their flights. All things considered, U.S. carriers wouldn’t be too displeased to see a summertime replication of what Chinese carriers are currently experiencing: Domestic flights about half full, albeit with many fewer flights than is typical this time of year. An April 17 report in Hong Kong’s South China Morning Post said travel bookings for the upcoming May Labor Day holiday are surging, especially to tourism hotspots with less stringent quarantine or isolation policies, like Hainan island.
aren’t counting on any of this, however, at least not anytime soon. United
sounds particularly pessimistic. After borrowing yet another $250m from Bank of
America last week, the Chicago-based giant is already concerned about its
financial health post-September, when the federal payroll money runs dry. That
money, remember, won’t even fully pay for payroll through September. Scheduled
capacity as late as June will be down 90% y/y, implying minimal revenues. So
elevated cash burn will likely be the norm for a while. For all of May, sadly,
United expects fewer customers than it flew on a single day last May. During
the first two weeks of April, it carried 200k people, down from 6m in the
comparable period a year ago. It’s not expecting a quick recovery. It also of
course has a lot of international exposure which will likely take the longest
to revive given border restrictions now in place.
Meeting planners and tour operators, United said, will do their best to accommodate people looking to avoid large crowds. “Even when social distancing measures are relaxed, and businesses and schools start to reopen,” it adds, “life won’t necessarily return to normal.” Wasting no time, United is already prepping workers for a likely post-September downsizing. As current and future CEOs Oscar Munoz and Scott Kirby wrote to employees last week: “We plan for our airline, and our overall workforce, to be smaller than it is today, starting as early as Oct. 1.”
American’s Doug Parker wasn’t quite so gloomy in an appearance on CNBC. He sees a “very gradual” recovery in the second half of the year, though the exact timing will depend on when popular tourist sites like Disneyworld reopen again. Bookings for travel beyond 90 days from now are in fact ticking up a bit, albeit with liberal cancellation rights. American’s sales team, meanwhile, says some companies are currently planning meetings and conventions for Q4. Parker doesn’t think people are avoiding flying because they’re worried about health safety, but rather because they’re confined to their homes and losing their jobs. American, remember, entered the crisis with more liquidity and a more valuable fleet than perhaps any airline in the world. It was also poised to see cash flow surge as aircraft spending commitments were due to drop sharply in the coming years. All of this gave it confidence to pay for planes with big dollops of extremely low-interest loans rather than cash from its balance sheet, using the cash instead to satisfy Wall Street’s demands for dividends and buybacks. Put another way, it (like so many other American companies) took on lots of low-interest debt thinking its future cash flows could easily handle the repayments. Then an asteroid hit.
Delta entered the crisis with less debt. It is after all, a significantly more profitable airline than most of its peers. And with a more flexible workforce of mechanics, it could rely on older less expensive planes. But in the wake of an asteroid hit, even the mighty Delta suddenly finds itself with junk-rated credit. Its traffic is down 95% y/y. It’s flying just 20% of its planned schedule. Last quarter alone, it felt compelled to borrow $3b. The Wall Street Journal reports that it, along with United, might resort to something they were forced to do in prior crises: Sell frequent flier miles to their credit card partners for future use, presumably at a deep discount. Yes, even Delta is burning the furniture to keep from freezing to death.
Southwest is certainly no exception.
It’s just hoping it doesn’t have to break its 49-year streak of never having
involuntarily laid off or furloughed a single employee. Alaska says government
aid will cover just 70% of its budgeted payroll costs for the next six months.
JetBlue says the aid provides “breathing room” but not much more. Its flights
are just 10% full, and it ominously told staff: “We will have far less work and
fewer hours for every salaried and hourly crewmember.”
Allegiant, meanwhile, said revenue for March was down more than 40% y/y, and capacity for April and May will be down 80% to 90%. It’s postponing the launch of bases at Des Moines and Concord near Charlotte, as well as new service to Houston Hobby and Boston Logan.
No one knows exactly what the recovery will look like. But carriers are starting to visualize some aspects of its nature. The industry’s cost base it seems, will be lower. Fuel costs, even if they bounce from their extreme lows, will likely remain low. Aircraft will be available at distressed prices. Carriers are using this opportunity to renegotiate contracts with a variety of suppliers and other stakeholders, themselves with greatly diminished bargaining power in the current environment. They’re also seizing the moment to shed unwanted earlier-generation planes. As United’s statements show, labor costs might drop as well, perhaps resulting from management extracting concessions from unions. The industry, it seems, will be smaller for a time, with fewer planes and fewer seats to serve fewer passengers.
On the other hand, airlines will incur higher financing costs with their credit ratings shot and their balance sheets bloated with debt. With limits on executive spending, recruiting top-tier talent could prove difficult, as it did when executive bonus pay became controversial after 9/11. The industry, furthermore, might need to grapple with new realities at the airport and in the air, just as they were forced to do post 9/11. Seth Kaplan, formerly of Airline Weekly, speaks of the “4 Ms” of corona-era air travel: masks, minimal onboard service (which could affect ancillaries), middle-seat blocking (which would greatly raise unit costs), and mass discounting.
Deep discounting would of course be less feasible if middle seats were indeed blocked. But carriers will likely have no choice early on but to lure family-visit and leisure traffic back with low fares. Price-insensitive corporate traffic, remember, was last to recover after the financial crisis. Kaplan sees three key prerequisites to recovery: Americans being told by public health officials it’s acceptable to fly again, Americans feeling comfortable to fly again, and Americans having enough money to fly again.
All of that said, U.S. airlines are still structurally better equipped to make money than they were coming out of the global financial crisis a decade ago. Well balanced capacity and demand, for one, is easier to achieve post-consolidation. Today’s fleets are more efficient and more capable. Cost structures are more variable, with profit sharing for example a larger part of total labor compensation. Ancillaries are a more meaningful revenue source. Co-branded credit card contracts negotiated pre-bankruptcy are more lucrative. Airlines today have more control over their distribution and e-marketing thanks to advances in data analytics and a greater ability to sell, upsell, and showcase their products, even on GDS screens. Revenue management algorithms are more sophisticated. Branded pricing was an important development. Tools like mobile apps allow customers themselves to handle tasks (i.e. flight rebooking) that once required customer service agents.
If cheap enough, even Americans with tight budgets will fly to visit mom in Florida. They might already be itching to meet their friends at Jackson Hole airport for a road trip through Yellowstone Park. Visiting dense cities like New York and San Francisco, or crowded places like Disneyworld, might prove less popular until the virus is under control. As for corporate traffic, there will be some companies that emerge from the crisis with money to travel, and not just producers of toilet paper and sanitizer — think big travel spenders like technology and health care companies, not to mention the Federal government. Banks for now are still relatively healthy too. On balance though, corporate travel spending will be far less than it was pre-crisis, perhaps for several years. How could that not be so with economies shrinking dramatically, global supply chains breaking, and industrial sectors like energy, manufacturing, retail, and travel itself in a state of disarray. This new reality doesn’t mesh well with efforts by American, Delta, and United to invest heavily in premium products and services pre-crisis.
Will the U.S. airline sector experience another round of consolidation? That’s unlikely given how few carriers currently serve a population of 330m people. Maybe a Spirit and Frontier combination might make sense. Or the merging of certain regional carriers. But industry fragmentation is not a problem like it was in the 2000s, when overcapacity was a chronic condition. We’ll see if even new startups like David Neeleman’s Breeze get off the ground in such horrid conditions. More worryingly, if demand remains extremely depressed into 2021, bankruptcies could again become the norm.
That would be another dark chapter in the darkest of all airline industry sagas. Hopefully, it won’t come to that, and airlines instead can get off their backs and at least start generating some revenue again. The tides are still too high to start rebuilding the sand castle. But tides turn.
|Payroll Grants in $b||Amount Actually Given as Loans, Repayable With Interest|
- Who’s getting how much in payroll grants from the new CARES Act?
- Airlines and amounts disclosed so far (other carriers are getting money as well).
Around the World: April 20, 2020
|Airline Name||Change From Last Week||Change From Last Year||Comments|
|American||-7.5%||-66.3%||CEO Doug Parker tells CNBC he’s happy to accept Treasury’s conditions tied to aid disbursement, including warrants and partial repayment obligation|
|Delta||-0.5%||-58.5%||Offering free travel to medical professionals volunteering to help areas hard hit by coronavirus, incl. NY, Louisiana, Michigan|
|United||-7.7%||-67.4%||Labor accounts for about 30% of its total cost base, though this can fluctuate depending on fuel and other costs|
|Southwest||-14.5%||-40.9%||Flights will be fully bookable in Travelport’s Apollo and Worldspan GDS starting May 4, The Beat reports|
|Alaska||-5.3%||-51.2%||Airlines Reporting Corp. says U.S.-based travel agents sold just $1.3b in airline tickets last month, down $8b from last March|
|JetBlue||-5.5%||-47.1%||Airbus postponing planned production ramp-up of its A220s|
|Hawaiian||-2.6%||-62.4%||Treasury says federal aid money will “help preserve the strategic importance of the airline industry”|
|Spirit||-5.2%||-76.0%||Recently committed to building new Ft. Lauderdale headquarters; watch to see if it’s forced to postpone work on that|
|Frontier||(not publicly traded)||Bill Franke of Indigo Partners, which owns Frontier, tells CNBC the airline will apply for federal loan money|
|Allegiant||-10.0%||-43.9%||Nearly 700 of its staff (15% of the company’s workforce) have taken voluntary, 60-day leave at half pay, with full benefits|
|SkyWest||-9.3%||-56.8%||Republic CEO Bryan Bedford, talking to Routes, says federal aid won’t adequately cover costs; does see lots of pent-up demand|
|Air Canada||-9.6%||-43.7%||Mandating that all passengers wear protective face covering, i.e. masks|
|WestJet||(not publicly traded)||Air Transat the latest Canadian carrier to announce it will be hiring back workers using government wage subsidies|
|Aeromexico||-8.0%||-65.4%||Busiest domestic route by pax in Feb. was Mexico City-Cancun (volumes down 2% y/y); no. 2 route Mex-Guadalajara saw 23% increase (ALTA)|
|Volaris||-1.3%||-43.2%||Mexican economy hit by devastation of tourist sector, low oil prices, weak U.S. economy to the north|
|LATAM||11.5%||-55.9%||Regulators forcing it to surrender four Sao Paulo Guarulhos slot pairs, with no compensation, for use on Santiago route|
|Gol||3.2%||-45.3%||Brazil-Argentina was the busiest cross-border market within Latin America last year, with 3.5m pax flown (ALTA)|
|Azul||-0.7%||-48.9%||Controlling shareholder David Neeleman forced to sell chunk of his non-voting Azul shares to meet capital requirements tied to a personal bank loan|
|Copa||9.5%||-38.1%||Colombia-Panama the second-busiest cross-border market within Latin America last year (2.3m flown)|
|Avianca||25.3%||-61.1%||Freezing loyalty plan miles and status so members don’t face expirations while planes are grounded|
|Emirates||(not publicly traded)||Boeing to partially resume widebody aircraft production in Seattle this week; Charleston B787 plant to remain closed|
|Qatar||(not publicly traded)||Has unfortunate exposure to embattled Cathay Pacific through its 10% ownership stake|
|Etihad||(not publicly traded)||CEO tells Reuters it has full support of Abu Dhabi’s government; recent restructuring efforts helping it weather current storm|
|Air Arabia||11.5%||-1.0%||Royal Jordanian CEO tells Bloomberg TV the airline has enough cash to survive through the end of June|
|Turkish Airlines||7.3%||-26.7%||Israel, an important market for Turkish carriers, begins to relax lockdown on businesses; not air service though|
|Kenya Airways||-14.4%||-78.7%||Kenya the world’s fourth largest flower exporter behind Netherlands, Colombia, and Ecuador; nobody buying flowers right now|
|South Africa Air.||(not publicly traded)||Is this the end? Government simply can’t find enough money to keep airline alive while fighting the coronavirus|
|Ethiopian Airlines||(not publicly traded)||Can manage without government aid for about three more months, according to Bloomberg|
|IndiGo||2.5%||-32.5%||With call centers closed due to virus, pax needing assistance with refunds/credits need to use email, live chat, social media|
|Air India||(not publicly traded)||Stopped taking any bookings, period, even for flights later in the year|
|SpiceJet||3.6%||-63.4%||Though cheap oil is helpful to India’s economy, that hasn’t stopped the rupee from depreciating sharply vs. the U.S. dollar this year|
|Lufthansa||-6.8%||-62.8%||Putting all 17 of its A340-600s in long-term shortage; doesn’t expect them to reenter service for at least another year|
|Air France/KLM||-10.0%||-57.4%||French President Macron, to FT: crisis will change the nature of globalization and the structure of international capitalism|
|BA/Iberia (IAG)||-5.4%||-58.5%||Headline in Spain’s El Pais: Tourism faces the worst year in its history; calls sector the “national economic locomotive”|
|SAS||-1.5%||-57.3%||Closely watching events at Norwegian; at this point, even if it survives, it will probably be a lot smaller|
|Alitalia||(not publicly traded)||Gov’t holding off on planning for a slimmed-down new Alitalia until it has more clarity on post-crisis demand conditions|
|Finnair||-4.7%||-50.6%||Icelandair planning to sell new shares, which will depend on securing union concessions; also talking to lenders, lessors, suppliers, gov’t|
|Virgin Atlantic||(not publicly traded)||Application for government aid initially rebuffed, Financial Times reports; needs to show it can’t get funding elsewhere|
|easyJet||-6.2%||-47.3%||Will take no further aircraft deliveries through September 2021; retains option to defer a further 5 deliveries the following fiscal year|
|Ryanair||0.0%||-19.4%||CEO O’Leary tells Reuters that blocking middle seats would be “hopelessly ineffective;” said it would still be able to break even|
|Norwegian||-34.3%||-86.6%||Stock plummets again as investors react to draconian debt restructuring plan designed to save the company|
|Wizz Air||0.3%||-20.5%||airBaltic still eyeing eventual IPO, its CEO tells Baltic Business Daily; says it can make it through this crisis|
|Aegean||1.8%||-41.1%||In Europe, unlike the U.S., most shorthaul flying crosses borders; E.U. not behaving like a single country in terms of travel restrictions|
|Aeroflot||-5.8%||-24.8%||Stopped selling tickets on all international flights all the way through August|
|S7||(not publicly traded)||President Putin announces modest plan to provide airlines with $310m in aid; industry will likely need much more|
|Japan Airlines||-1.8%||-48.7%||Plans to operate just 6% of its international schedule through the end of May; doing more cargo-only flights|
|All Nippon||1.4%||-38.5%||Reminder: ANA signed a joint venture deal with Singapore Airlines on Jan. 31, just before the crisis spread globally|
|Korean Air||2.7%||-41.8%||Has nearly $200m worth of maturing corporate bond payments to make… this month alone! (Yonhap)|
|Cathay Pacific||3.5%||-32.7%||Will close its U.S. flight attendant bases, located in Los Angeles, San Francisco, and New York|
|Air China||1.7%||-48.1%||Big Three Chinese carriers scheduled to report Q1 results next week; both Air China and China Eastern go April 29|
|China Eastern||0.0%||-44.1%||Plans announced for super-high-speed maglev train connecting Shanghai and Hangzhou|
|China Southern||-0.4%||-40.6%||Transferring more flights from old to new Beijing airport; China Eastern doing so as well|
|Singapore Airlines||1.6%||-36.9%||Taiwan’s China Airlines reportedly considering a name change to avoid being confused with a mainland carrier|
|Malaysia Airlines||(not publicly traded)||Merger with AirAsia idea again getting traction with some government officials; was discussed even pre-crisis|
|AirAsia||8.3%||-68.3%||Will gradually begin restarting domestic flights on April 29, commencing with Malaysia; then Thailand, Philippines, India, Indonesia|
|Thai Airways||10.2%||-43.5%||Government still studying how best to keep it from running out of cash|
|VietJet||7.6%||3.4%||Talking to Airbus about adjusting NEO delivery schedule for this year, Bloomberg reports; surely not the only airline doing so|
|Cebu Pacific||7.7%||-37.7%||State-owned Vietnam Airlines divesting 49% stake in Cambodia Angkor Air|
|Qantas||4.5%||-34.5%||Exploring possibility of selling its Jetstar Pacific stake back to JV partner Vietnam Airlines|
|Virgin Australia||0.0%||-53.5%||Melbourne airport, saying crisis will pass, still professes need for new gates, taxiways, baggage systems, and runways|
|Air New Zealand||45.6%||-52.7%||Mar 14: NZ gov’t says all arriving pax must self-isolate for 2 weeks; Mar 20: NZ closes borders to all but citizens and permanent residents|
|Brent Crude Oil||0.3%||-55.9%||Global oil demand is expected to plummet by more than 9m barrels a day this year|
Some stocks traded on multiple exchanges; not intended for trading purposes.