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.
Verbulence
"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.