Winter is Coming

Pushing Back: Inside This Issue

Things were going well for easyJet before the crisis. Rivals were perishing. Yields were rising. The short-term question now is can it recover some momentum as European countries reopen their borders, as virus infections in Europe recede, and as tourists start venturing back to the beach. It has about two months to salvage some peak summer demand. Then it will batten down the hatches for the offpeak half, before angling to reassert its formidable strengths (i.e. a great airport slot portfolio) in 2021. The most important thing it can do to counter greatly reduced revenues: Greatly reducing its costs. That, unfortunately, will involve heavy job cuts.

Canada’s WestJet is another airline shrinking its workforce, the inevitable consequence of a much smaller airline industry for perhaps years to come. Cheap fuel would certainly help, even for a carrier based in the oil city of Calgary. A more relaxed Canadian policy with respect to border closures would help too. What would help the most of course — for all airlines and all people everywhere — are vaccines to defeat the Covid scourge. Reports from the scientific community (fingers crossed) remain hopeful.

It’s a tough enemy no doubt. Mini-outbreaks are even resurfacing in Australia, which was pretty close to eradicating the baleful plague. That’s not diminishing the bullishness of Qantas, however, nor the new owners of Virgin Australia. Both are hopeful for a relatively swift domestic recovery, albeit not spared the trauma of mass layoffs.

As U.S. airline workers await the fateful autumn hour when federal pay protections expire, their employers continue to raise massive sums of new money, mostly through borrowing but also by enticing investors to buy more airline stock. So far, the U.S. traffic recovery is shaped like a V, or more accurately an unfinished V with the right side still small. Covid cases, however, continue to expand alarmingly across the country’s southern half. It doesn’t help, alas, to have more and more airplanes flying around the country, contributing to Covid’s spread. Governments are now implementing a new round of policies to encourage mask-wearing and reduce high-risk business activity and even interstate movement.

The virus continues to tear through countries like Brazil, India, and South Africa as well. All are important markets for Lufthansa, which can momentarily breathe easier after securing shareholder acceptance of a giant government rescue. KLM received a government lifeline too.   

Verbulence

"We are happy with the demand that we see on new bookings outside the U.K. I think it's fair to say that U.K. is lagging behind, and we can link that back to the quarantine."

EasyJet CEO Johan Lundgren

Mondays With Skift Airline Weekly

Brian Sumers, Skift senior aviation business editor, joined Skift Airline Weekly Editor Madhu Unnikrishnan for this week's edition of our weekly livestream. You can watch a recording of the livestream here.

Earnings

January-March (3 Months)

• Aegean: -$95m; -$52m*; -48%

October 2019-March 2020 (6 Months)

• easyJet: -$459m/-$249m*; -7%

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