Issue No. 772

Bad Math for Cath

Pushing Back: Inside This Issue

The airline recovery continues, but so does Covid’s spread. In the U.S., airport traffic remains on a steady upward trajectory, especially in states that reopened their economies and tourist attractions early. Those same early openers though, including the giant Florida and Texas markets, are now experiencing Covid outbreaks, threatening the recovery. China, much further along in controlling the diseases, discovered a new cluster of cases in Beijing last week. Far more widespread is a surge of new cases in South America (led by Brazil and Mexico) and the Indian subcontinent.  

Europe, meanwhile, where the outbreak is mostly receding, hopes to salvage some of the peak summer tourist season by opening internal borders this month. But some countries like the U.K. are moving slower, effectively forbidding inbound tourism by imposing mandatory two-week quarantines on arriving passengers. A few other places worldwide are already welcoming international tourists with few or no restrictions, including Mexico’s beach resorts. But in general, international borders still remain closed for all but essential travel. That even includes the U.S.-Canadian border, and borders within East Asia where many countries have the virus under control. Still, across the world, airlines are restoring flights, some like American rather aggressively, and some like Cathay Pacific more conservatively.

In terms of the industry’s financial health, or absence thereof, IATA expects carriers to collectively lose $84b this year, followed by a $16b net loss next year. That’s of course subject to a lot of unknown variables, like the price of fuel and — perhaps most importantly — progress in developing and administering a Covid vaccine. It’s not inconceivable that some airlines, most notably U.S. airlines, might earn domestic profits next year, if the economy recovers, if travel demand recovers, if industry input costs stay depressed, if the virus is contained or defeated, and if carriers maintain current plans to greatly shrink capacity. Lots of “ifs.” But “if” is better than “no chance,” which defines the probability of any airline making money this year.  

Healthy recovery next year will also depend on an upcoming battle with unions to extract contract concessions. It’s a battle shaping up at airlines across the world, amid universal downsizing. Already, tensions are flaring, as the example of British Airways shows. Its rival Virgin Atlantic, meanwhile, remains on bankruptcy watch, unable to secure meaningful government assistance. The same goes for LOT Polish and Azul in Brazil. Not Cathay Pacific though. Last week, it joined another group of European airlines (i.e. Austrian and TAP Portugal) in the club of carriers relieved of immediate liquidity stress by generous government saviors.


"One thing is certain: The travel industry is going to be profoundly transformed."

Transat CEO Jean-Marc Eustache

Mondays With Skift Airline Weekly

On Monday, June 15, Chris Jones, McCarran International Airport chief marketing officer, discussed how the pandemic affected traffic to one of the largest leisure destinations in the country, and how things look now that Las Vegas is reopening. You can watch a recording of the event here.


January-March (3 Months)

  • Philippine Airlines: -$182m; -20%

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

Weekly Skies

Philippine Airlines is no stranger to ugly financial results. But not this ugly. Battered by Covid’s wrath, the airline reported a negative 20% operating margin for the turbulent first quarter. That’s a giant reversal from positive 6% in the same…

State of the Unions

Labor relations continue to flare at British Airways, as several of its unions are refusing to negotiate with management on wage concessions. This follows weeks of contentious talks that caught the attention of members of parliament (see the June 8…

Landing Strip

New York’s LaGuardia Airport, often the butt of jokes and derided for its outdated facilities, got a much-needed facelift. Gov. Andrew Cuomo last week unveiled a refurbished Terminal B arrival and departure hall, an 850,000 square foot facility that is…


Indian booking platform Yatra says it is seeing a slow return of air travel in the country, although capacity remains between 15% to 20% of pre-pandemic levels. Much like in the rest of the world, leisure bookings are leading the…

Covid Crisis 2020

IATA now thinks the global airline industry will lose a massive $84b net this year, and another $16b in 2021. Operating margin this year will be something like negative 23%, and next year negative 4%. The last year in which…

Feature Story

Long before anyone ever heard of Covid-19, Hong Kong’s Cathay Pacific was an airline in trouble. Surprised to hear that? Maybe because Cathay was never really close to running out of money. Its reputation for excellent service, even among the…