Latam: The Biggest Bankruptcy Yet

Pushing Back: Inside This Issue

The month of May, to the great relief of airlines, was considerably better than April. June and July are trending better too as cancellation rates drop, bookings increase, and flights resume. The recovery will be long. But it’s now underway.

With massive amounts of government aid — Lufthansa just got a big dose — some airlines won’t have to worry about bankruptcy. Others like Latam weren’t so lucky. In the U.S., American even raises the prospect of making money next year, which doesn’t sound all that crazy in light of the massive cost- and capacity-cutting underway. Revenues thus won’t have to be strong, or anything even close to it. Keep in mind too that a vaccine might have solved the Covid problem by the end of 2021. Ironically, the mighty Delta, along with United, might be least well positioned to profit given their heavy intercontinental exposure. The action for now is domestic and shorthaul. Outside the U.S., easyJet is seeing shorthaul demand start to recover. Air New Zealand is seeing it. Chinese carriers are seeing it. And so on.

Any profits achieved in 2021, of course, will be bittersweet. Announcements last week by Delta, American, easyJet and others were reminders of all the aviation jobs that will disappear, in an industry becoming significantly smaller. Nor has the risk of further Covid outbreaks gone away. Far from it. Governments are not reopening borders in a coordinated way as IATA is asking. In the geopolitical realm, U.S. tensions are boiling. Within the U.S., there’s unrest in the streets, with a heated presidential election just months away. Economies across the world are experiencing depression-like conditions. Airlines themselves are racking up debt.

It’s getting less bad out there. But not yet close to good.

Verbulence

"What is certain is that we need to rethink our model, rethink our network, our markets, our services, our products and our customer relationships."

Air France/KLM CEO Ben Smith

Mondays With Skift Airline Weekly

Join Airline Weekly Editor Madhu Unnikrishnan and Senior Analyst Jay Shabat to hear about Latam and what it might mean for the airline industry's web of alliances.

You can watch a recording of the livestream here.

For future livestreams, registration is free for logged-in subscribers here, at forum.skift.com.

Earnings

February-April 2020 (3 Months)

• SAS: -$354m; -63%

January-March 2020 (3 Months)

• Latam: -$2.1b/-$318m*; 4%
• Turkish Airlines: -$327m; -12%
• Norwegian: -$345m pretax; -24%

January-December 2019 (12 Months)

• Kenya Airways: -$127m; -1%

*Net result in USD/*Net result excluding special items/ Operating margin