Issue No. 767

Start Your Engines

Pushing Back: Inside This Issue

It’s going to be a smaller airline industry. That much seems sure, for at least the next few years as carriers adjust to a world with less travel. Fewer planes. Fewer routes. Fewer airline workers. It’s not a pretty picture.

From Europe to North America to Latin America, airlines last week lined up to share grim details about their first-quarter trauma, which will only get worse in the current quarter. Virgin Atlantic is exiting London Gatwick. Two more airlines, Colombia’s Avianca and South Africa’s Comair, are bankrupt. What in the world will Emirates do with all of those A380s? Despair, despair, everywhere.

Fortunately, most big airlines have enough cash to wait the crisis out. But that’s only because they’ve borrowed gargantuan sums of money, often with government backing. Even the industry’s most muscular balance sheets pre-crisis are now larded with debt. So even if demand comes roaring back tomorrow, the industry will take years to recover its pre-crisis health.

Demand, unfortunately, won’t come roaring back tomorrow. Not with travel restrictions still in place, economies in shambles, unemployment lines growing, and the virus still killing thousands of people every day. Airlines, are however, planning a gradual restoration of flights this summer and into the fall.

Chinese carriers, providing a possible window on what carriers elsewhere might expect as the outbreak dissipates, are showing some modest signs of demand recovery. U.S. carriers say they’ve at least bottomed out a few weeks ago, with bookings tricking in at a slightly higher rate in May. Norwegian has a new lease on life after pointing a gun at the heads of creditors and shareholders. IAG is preparing to take drastic restructuring steps, just as it did with great effect after the global financial crisis. All airlines have at least some restructuring efforts underway, be it downsizing their aircraft order books or approaching unions for permanent concessions. Revenue from robust cargo demand, meanwhile, won’t put a meal on any airline’s table. But every little breadcrumb counts.    

There’s a hint of life on international travel too. Australia and New Zealand, both largely Covid-free now, may create a “travel bubble” allowing flights between the two countries. The concept is under discussion elsewhere, including parts of Europe and East Asia. 

This week, Singapore Airlines will be among the carriers reporting their first-quarter carnage. Let’s hope it provides an inkling of hopeful news as well.


"If history is any indicator, low cost, low-fare travel is where the recovery comes first."

Spirit CEO Ted Christie

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January-March 2020 (3 Months)

  • Air France/KLM: -$2b/-$1.5b*; -16%
  • IAG: -$1.87b/-$618m*; -12%
  • Air Canada: -$783m/-$293m*; -12%
  • Alaska: -$232m/-$102m*; -9%
  • JetBlue: -$268m/-$116m*; -8%
  • Hawaiian: -$144m/-$34m*; -8%
  • Spirit: -$28m/-$59m; -8%
  • Gol: -$514m/$39m*; 7%
  • Copa: $74m; 17%
  • Icelandair: -$240m/-$73m*; -44%
  • SkyWest: $30m/$69m*; 9%

October 2019-March 2020 (6 Months)

  • Emirates: $235m; 6%

October-December 2019 (3 Months)

  • Frontier: $56m; 10%
  • Sun Country: $5m; 7%

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

Weekly Skies

A troubled carrier in good times, Air France/KLM is an existentially challenged carrier in times like these. Or one would think. The first quarter of 2020 was indeed a nightmare for Europe’s second-largest airline group by revenues. Operating margin was…

Sky Money

U.S. airlines spent another week hunting for cash, in most cases successfully. Southwest sold 20 B737s in a sale-leaseback arrangement, specifically 10 MAX 8s and 10 -800s. It expects to receive gross proceeds of more than $800m. Spirit sold both…


AerCap, an aircraft leasing giant, did its best to temper the widespread gloom pervading the world’s airline industry. For lessors with modern machines and a global presence anyway, there’s no reason to panic. For one, AerCap will have fewer competitors…

State of the Unions

United raised objections (and some eyebrows) from its unions and some lawmakers for its proposal to reduce some employees’ hours to part-time in order to cut labor costs. None other than American CEO Doug Parker (formerly United President Scott Kirby’s…

Landing Strip

Airports Council International, the umbrella organization for the world’s airports, forecasts that its members will see 4.6b fewer passengers this year due to the Covid pandemic. This translates to $96b less in revenue. Airports are expected to see $40b less…


That was quick. Frontier last Monday announced it would charge passengers $39 to block the middle seat in their aisles in an effort to increase social distancing onboard. It didn’t go well. The Denver-based ULCC faced immediate blowback on social…

Routes and Networks

Every airline in the world is restructuring. They’re slashing costs, changing their fleet plans, negotiating with stakeholders… but few are announcing any changes to their networks; that will come later for most airlines, after they start flying again in earnest.…

Covid Crisis 2020

IATA’s latest weekly crisis update with journalists focused on the prospect for airfares in the post-Covid world. Some forces, it said, will push fares down, namely weak demand, cheap fuel, excess capacity, the relatively early return of service by LCCs,…

Feature Story

Who’s ready to start a new airline in the U.S.? No, seriously.