Issue No. 776
Pushing Back: Inside This Issue
It was nice while it lasted. But the U.S. demand recovery has lost its momentum. After a near-complete freeze in discretionary air travel that started in late March, Americans gradually became more comfortable getting on planes, to popular fun spots like Florida and Arizona. May was better than April. June was looking better than May. By late June though, Florida and Arizona were among the new global epicenters of the Covid-19 pandemic. Would-be travelers grew increasingly wary. Just as damagingly to the recovery, states like New York and Illinois told anyone returning from a hotspot like Florida to quarantine in their homes for 14 days. For most people, that’s not a practical option.
For the U.S. airline industry, the stalled recovery means fading hope of avoiding mass layoffs this fall. United warned it could slash its workforce by nearly half. It won’t be alone. In Europe, Lufthansa is preparing for mass layoffs too, though playing a bit of JetBlue-like offense as well. As JetBlue attacks L.A., Lufthansa is launching a new low-cost unit under the code name Ocean. Elsewhere in Europe, SAS isn’t getting the bondholder buy-in it needs to recapitalize. Virgin Atlantic, on the other hand, appears close to securing new rescue capital.
The virus is a tough foe, resurfacing with mini-outbreaks even in countries with the most success in containing it, like South Korea, Australia, and Japan. The virus is gaining bigger victories in parts of the ASEAN region, where AirAsia’s existence hangs in the balance. Ironically, the historically much flimsier Garuda is on firmer ground, with support from its government and lenders.
In the Covid cauldron of Brazil, Gol surprisingly said it would report a Q2 operating profit, minus extraneous accounting items. Cargo’s helping a lot. Gol’s rival Latam, as it navigates bankruptcy, hasn’t lost any enthusiasm for planned cooperation with Delta. Israel’s El Al will live to see another day with government help. This week, Air Arabia and Etihad will launch their new joint venture.
International borders, meanwhile, remain largely closed, some relaxation within Europe notwithstanding. Is there any way of safely reopening before a vaccine? Is there any way of stabilizing airline cash flows? Is there any way of avoiding a prolonged global depression?
I want to be clear to every pilot notified today of an expected furlough: This is not your fault, you are not alone, and you have your union’s support throughout this terrible ordeal.”United pilots union chief Todd Insler, in a message to members
Mondays With Skift Airline Weekly
Skift Airline Weekly's editors this week discussed the stalling recovery, as coronavirus cases around the U.S. spike. And is now a good time to launch an airline? Register for free to watch the replay here. We'll post an audio podcast as well on airlineweekly.com.
January-March 2020 (3 Months)
- AirAsia: -$313m/-$153m*; -13%
- Garuda: -$124m/-$301m*; -23%
*Net result in USD/*Net result excluding special items/ Operating margin
- AirAsia is an undeniable airline success story. But along its path to prosperity were many moments of hardship, and many areas of weakness. It was once bullied by its government to merge with Malaysia Airlines (the latter’s unions mercifully torpedoed the deal). It was accused of corruption and deceptive accounting. Its sister longhaul airline — AirAsia X — is a perennial loss-maker. Ventures in Japan, India, Indonesia, and the Philippines rarely if ever make money. One of its planes crashed in 2014, killing 162 people. It couldn’t get along with Japan’s ANA. It repeatedly failed to form joint ventures in China and Vietnam.
But never before has it faced adversity like this, born from the Covid pandemic. During the first quarter of 2020, AirAsia reported a gruesome negative 23% operating margin, covering its core Malaysian airline, as well as affiliates in the Philippines and Indonesia. Thai AirAsia, whose results are accounted for separately, did much better, producing a positive 9% operating margin as a 30% y/y drop in operating expenses kept pace with a 30% drop in both revenues and ASK capacity. The group’s two non-ASEAN ventures, in India and Japan, both recorded Q1 losses. Both, furthermore, are the subject of divestiture rumors, with partner Tata Group reportedly interested in buying full control of AirAsia India.
Combining results for all six airline units, the AirAsia Group’s operating margin was negative 13% last quarter, on a 16% drop in ASK capacity. More worrisome is the company’s balance sheet, on which short-term liabilities exceed short-term assets. That was actually the case even before the crisis, leading auditors to express “significant doubt” about the company’s survival. Founder and CEO Tony Fernandes is trying to reassure stakeholders, pointing to reviving domestic demand and the imminent restart of international flights.
AirAsia, already one of the world’s lowest-cost carriers, is slashing costs further by cutting jobs, cutting pay, restructuring fuel hedge contracts, closing bases, deferring aircraft deliveries, and renegotiating supplier contracts. The biggest contributor to management’s goal of a 50% reduction in operating costs? Lower fuel expenses, thanks to lower anticipated prices but also lower usage with its capacity reductions — capacity should itself be down about 50% this year. Savings will also come from efficient new A321s, lower airport charges, and efficiencies gleaned from digital technologies.
What investors really want to know though, is can AirAsia successfully raise additional cash? That could involve selling new or existing shares. It could involve selling assets. It will likely involve more borrowing. It might involve some additional government support, beyond lending guarantees already provided by several of its host countries. AirAsia still insists it’s more than just an airline, referring to the AirAsia 3.0 business plan it announced with great fanfare last year. The idea is to use the airline’s treasure trove of passenger data as feedstock for various platform businesses, the principle ones being cargo, financial services, loyalty, and AirAsia.com (selling even flights offered by other airlines). “We are a digital travel and lifestyle company,” AirAsia said in its Q1 earnings presentation. For the record, cargo was profitable last quarter, aided by an increase in home delivery during the pandemic. AirAsia.com and other auxiliary businesses, however, lost money.
Back at the airline, load factor for June was 60%, Fernandes told the Malaysia Star, and 65% in Malaysia alone. He sees July loads reaching 70%. Unlimited flight passes proved popular. Surveys show pent-up demand for visiting destinations like Japan, Bali, and Thailand. Take-up rates for ancillary services like seat assignments are up. The airline is no longer blocking middle seats in most of its markets. Already, about 80% of Malaysian domestic routes are back in the air, with some international routes hopefully restarting this month, pending relaxation of travel restrictions. In Thailand, the government is providing residents with money to spend on domestic travel.
And across the ASEAN region, competitive dynamics are changing, with Thai Airways in bankruptcy, NokScoot gone forever, and Malaysia Airlines still trying to figure out a means of existence, a challenge that bedeviled it long before the curse of Covid. Competitors for now, AirAsia says, are pricing rationally (that’s been mostly true across the world; not much heavy discounting for market share). When will demand conditions normalize? By late 2021, the airline estimates, with recovery of inbound tourism forming a U shape. AirAsia, for the record, started this year with 245 planes. It plans to end this year with 244.
- Another ASEAN-based airline, Indonesia’s Garuda, is less dependent on tourism, notwithstanding its busy Bali routes catering to beach-goers from around Asia and beyond. Indonesia, remember, is the world’s fourth most populous country in the world (after China, India, and the U.S.), and as such has lots of internal business and migrant traffic. With tens of thousands of islands, it’s also a country greatly reliant on air connections. But none of that helps much in a pandemic.
Like most other Asian airlines, Garuda was hit hard and early by the crisis, suspending all flights to the critical China market on Feb 5. By March 15, all of its international flights were grounded. As a result, the airline suffered a negative 23% operating margin for the first quarter, with revenues plummeting 30% y/y. Operating costs fell too, but by just 10%. Looking at capacity in ASK terms, Garuda’s Q1 flying decreased by 18% from the same quarter a year earlier. But within that figure lies an important distinction. International ASKs dropped 34% but domestic ASKs fell only 8%. In 2019, just 31% of the carrier’s total ASKs were domestic. Yet Garuda is hardly what you’d call a global carrier. All of its international routes are to East Asia or Australia, with the exception of two European routes (to London and Amsterdam), two Saudi Arabian routes (Jeddah and Medina), and one Indian route (Mumbai). The Saudi routes are particularly lucrative — and particularly hurtful to suspend — catering to religious pilgrims and typically flown as charters.
Back within Indonesia, the domestic market was on a consolidation track, with Garuda agreeing to assume management control of its rival Sriwijaya last year. It would collect a 5% management fee from Sriwijaya, and 65% of any operating profits it achieved. But in November, the arrangement fell apart over disputes about the extent of Garuda’s influence and control. Even so the Indonesian domestic market remains rather consolidated, mostly contested by only two other groups besides Garuda and Sriwijaya. One is Lion Air. The other is AirAsia.
Garuda itself has an LCC called Citilink, which actually earned a strongly positive 18% operating margin in the last quarter. Understanding why requires a look back to 2019, when Garuda engineered a groupwide domestic capacity cut of 21%. To repeat, it gutted more than one-fifth of its entire domestic flying long before anyone ever heard of Covid, hoping to boost yields. Citilink itself cut ASKs 9% last year and yields across the group sure enough jumped nearly 30%. This aroused the ire of government regulators, whose distortionary price regulations (including fare caps and fare floors) drove airlines to cut capacity in the first place. For airlines, the higher yields helped as intended, enabling Garuda to turn a 2018 operating loss into a modest 2019 operating profit.
Results for 2020, of course, will be back in the red, with y/y passenger volumes down 91% in April and 98% in May. Helpfully in times like these, Garuda is 61% government owned, with ample political support. This helped it restructure a $500m bond on which it nearly defaulted, giving it three more years to repay and a suspension of all covenants until demand conditions return to normal. Garuda was also helpfully growing its cargo business pre-crisis, enabling it to take greater advantage of the current cargo yield surge. In the meantime, it’s renegotiating aircraft lease contracts, cutting operating costs, closing chronically unprofitable routes (i.e. London and Nagoya), and deferring payments to airports and fuel suppliers.
Looking beyond the crisis, Garuda hopes to make good use of its new A330-900s, two of which were allocated to Citilink. It’s developing a maintenance business. It hopes to negotiate a higher price ceiling with government regulators. It wants to increase historically sluggish load factors by selling more seats in bulk to third party agencies. It eyes more codeshare and interline agreements beyond its relationships with fellow SkyTeam members. It wants to expand its passenger offerings to the Middle East. It might offer more longhaul nonstops directly from Bali. It wants to fly dedicated cargo planes. And it’s seeking a 30% increase in employee productivity.
Garuda by the way, says its two most important foreign markets are China and Saudi Arabia. CEO Irfan Setiaputra, meanwhile, sees full demand recovery taking about two-and-a-half years.
- Emirates President Tim Clark tells The Times of London that the airline will be lucky if it carries half the numbers of passengers that it did last year. A380s and B777-300ERs headline the bulk of some $50b in assets currently sitting on the ground. Roughly 22k flight attendants and 5k pilots are idled. A tenth of its workforce (6k people) was dismissed, with the figure potentially rising. Losses are probable this fiscal year (which started in April). Clark himself is working without a salary. Other employees swallowed pay cuts ranging from 25% to 50% for six months. Emirates raised $1.2b in new funds, mostly through borrowing. And that won’t be nearly enough if conditions don’t improve soon.
Will they? Clark actually sees global travel demand worsening over the next few months, as government aid tapers off. But by the second quarter of next year, things should start coming back strongly. “Give it a year or two,” he said, “and travel will come roaring back.” Predictions of business travel’s demise are wrong, he adds, just as they were when videoconferencing was first invented, when Asia experienced a currency meltdown in the late 1990s, when 9/11 disrupted the industry, and when the global financial system nearly collapsed in 2008. It always bounced back. By April 2022, he expects all of the airline’s A380s to be flying again, and for all of the airline’s premium amenities to be restored.
Most A380 operators, remember, are retiring the big birds, given all the passengers required to fill them, and their unattractive economics even before the crisis. Clark is surely mindful of all the capacity cutting its rivals are doing. On another long-discussed rumor — an Emirates-Etihad merger — he’s dismissive: The two carriers are “hugely competitive.” Clark by the way, was scheduled to retire last month but postponed his departure until November so he can help guide the airline through the Covid crisis. His successor hasn’t yet been named.
Breeze Presses Ahead
- David Neeleman is moving forward with his new carrier, Breeze, pandemic or no, Bloomberg reports. Breeze has filed for regulatory clearance to buy defunct regional carrier Compass‘ air operator certificate. Compass, remember, went out of business in April. If Breeze is successful, it could begin flights as early as October. The company also plans to raise $45m from shareholders. Also in the filing, reports Bloomberg: Breeze has settled a lawsuit with Canada Jetlines for poaching former Allegiant executive Lukas Johnson.
Separately, another Allegiant alum, Andrew Levy, plans to launch his new airline next year. Levy said he is taking advantage of depressed aircraft prices and buying B737s, instead of leasing them as originally planned.
The Economist Paints Dystopian Airline Scenario
- The Economist did a series earlier this month speculating on what the world might look like at different points in the future. In one article, it imagined the airline industry in May 2022, painting a dark picture of demand that never recovered from the Covid pandemic of 2020. IATA’s expectation that traffic would recover to 2019 levels by 2023 looks wildly optimistic. After vicious fare wars, many carriers disappeared, leaving a less competitive industry in which fares are rising sharply. Bailout recipients are awash in debt and burdened by new environmental regulations. People are more comfortable with online meetings. Depression-like economic conditions prevail. Firms fear lawsuits from employees who catch Covid-19 while travelling. Travel bubbles collapsed in panic when a second wave of infections hit in autumn 2020. The world’s youth, highly climate conscious, see air travel as a problem.
Sound frightening? Unrealistic? It certainly is a reminder that just because air travel has increased steadily for decades, and has always bounced back quickly from demand shocks, there’s no guarantee of that trend holding forever.
- Emirates tells Bloomberg it’s unlikely to get its first B777-9s before 2022. It has 115 on order, but might swap some for smaller B787s, said the carrier’s Chief Operating Officer Adel Al Redha. The B777-X, offered in two variants (the -8 and the -9), is envisioned as the successor to the enormously successful B777-300ER, loved by airlines across the world.
But the new model has won orders from just a handful of customers like the Big Three Gulf carriers, Lufthansa, Cathay Pacific, ANA, Singapore Airlines, and British Airways. Blue chip customers for sure, but hardly a critical mass. With the Covid crisis decimating intercontinental demand for perhaps years to come, it’s questionable whether even these airlines want such a large plane. In any event, Boeing continues to test fly the jet, which was originally supposed to enter service this year.
- The bad news doesn’t stop for Boeing. The Wall Street Journal is now reporting that American, one of the manufacturer’s top customers, is threatening to cancel 17 B737 MAX orders because it’s having trouble financing them. It was American, remember, that prodded Boeing to produce the MAX in the first place, needing rapid replacement for hundreds of aging narrowbodies, a mega-replacement that Airbus alone couldn’t satisfy. It wound up ordering hundreds of both MAXs and NEOs back in 2011.
AirAsia Doesn’t Regret Aircraft Sale
- AirAsia argued in its Q1 earnings presentation that it’s better off having sold most of its planes, transferring them to leases instead. Recall that two years ago, the airline sold nearly 200 of its A320s, with arrangements to lease them back, for more than $1b. This did of course mean the removal of valuable assets from its balance sheet, assets of the type many today are using as collateral to address crucial liquidity needs.
AirAsia, with severe liquidity needs, doesn’t have that collateral anymore. But it says leasing confers more flexibility to cut capacity and renegotiate terms, especially given the dire state of the global aircraft market (lessors often have no choice but renegotiate). There’s also no need to incur impairment charges on the value of grounded aircraft.
Regardless of its lease or own preferences, AirAsia retains a valuable relationship with Airbus, having ordered hundreds of planes over the years. This implies big price discounts, a major competitive advantage for the airline in normal times. It also implies that when AirAsia needs help in these abnormal times, Airbus will surely be as accommodating as possible.
- Latam is bankrupt. And Delta has its own financial problems to address. But don’t for a minute think that either has de-prioritized their planned cooperation. Last week, the two giants submitted a U.S. Transportation Department application for antitrust immunity, a prerequisite to forming a profit-sharing joint venture covering routes between North and South America.
Latam, to be clear, isn’t going away even though it filed for bankruptcy in late May. Last week, in fact, it secured another $1.3b in financing from Oaktree Capital, to fund operations while restructuring contracts with lenders, lessors, workers, and other stakeholders. Latam also incidentally put its Brazilian affiliate into U.S. bankruptcy protection last week, having previously just filed for units in Chile, Peru, Colombia, Ecuador and the U.S. It’s closing its unit in Argentina. The group is still negotiating a deal for additional capital from the Brazilian government. But with the new Oaktree funding, plus earlier funding from Qatar Airways and two family shareholders, government financing would be more of a bonus than a necessity.
Back to the new joint venture at hand, Delta and Latam touted the potential consumer benefits, including more convenient flight schedules and the opportunity to add new nonstop routes. Most interestingly, Delta is keen on challenging American with a mini-Miami hub, envisioning a 33% increase in Miami seat capacity once demand recovers from the current crisis. It means more than 20 new domestic flights a day to Miami from Delta’s hubs and other top corporate travel centers. Latam too will add flights and seats to Miami, something it was less inclined to do with its old partner, with which it failed to win antitrust immunity — a Chilean court thought that too anticompetitive.
American, after all, is the U.S. capacity leader in South America, as it will be even after losing Latam’s friendship to Delta — a new American-Gol partnership has since come into being. United, Avianca, Copa, and possibly Azul, meanwhile, had their own pre-Covid plans for cooperation up and down the Americas. Latam furthermore, promises to add other U.S. destinations, including perhaps Delta hub cities where it’s currently absent, i.e. Atlanta, Detroit, Minneapolis, Salt Lake City, and/or Seattle. The only route where the two carriers overlap? New York-São Paulo, also contested by American and United, with Azul having planned to join just before the pandemic.
Remember too that Delta and WestJet have a joint venture application pending with DOT, setting up the possibility of Latam also working with WestJet one day.
- It was a somber week for United and its employees (see Covid Crisis section below). But even as it threatened mass layoffs and warned of stalled recovery momentum, the Chicago-based giant said it would restore some additional overseas routes, including Chicago-Hong Kong and Los Angeles-Sydney. It’s also launching an all-new route from Chicago to Tel Aviv, a city it previously linked only to its Newark, Washington Dulles, and San Francisco hubs.
Israel’s El Al was all set to launch a Tel Aviv-Chicago route in March, until the Covid pandemic put a quick end to that idea. United, by the way, has already restarted Newark-Tel Aviv, and will in fact add some weekly frequencies next month. San Francisco-Tel Aviv restarted last week. Dulles-Tel Aviv will recommence in October.
To be clear, Israel’s borders are still closed to foreign visitors, including Americans. But Israeli citizens and permanent residents currently abroad are allowed to return, and dual citizens of Israel and another country like the U.S. can move back and forth as normal, albeit with 14-day quarantine requirements in some cases.
- The airline world marches on in some places, despite the pandemic. Volotea opened a new base in Naples, its sixth in Italy. The carrier is basing two A319s there, and is launching 17 new routes from the city, eight in Italy and nine outside of Italy. The country was an early epicenter of the pandemic, but has recently seen its cases decline. Europe on the whole has seen cases decline, and the E.U. slowly is reopening for tourism.
- Emirates is adding back to its network. Over the next several weeks, the carrier is restoring service to six cities: Geneva, Los Angeles, Dar es Salaam, Prague, São Paulo, and Boston. Passengers from the U.S. may only board an Emirates flight if they have tested negative for Covid within 96 hours of departure. Tests must be conducted by a U.S. or U.A.E. government recognized laboratory.
- May was a lot better than April, June a lot better than May. But the U.S. airline demand recovery is faltering in July, traditionally the busiest month of the year. The Sunbelt-state surge in Covid cases, it’s now clear, is taking its toll on traveler sentiment. Florida, more than any other state, was leading the recovery, with travelers from across the country escaping to its beaches this spring, if much less so its theme parks. But Florida is now among the world’s top Covid hotspots. So other areas of the country including New York and surrounding states have imposed mandatory two-week quarantine rules for anyone arriving or returning from Florida, along with other states with severe outbreaks.
By the start of July, the quarantine rule also applied to Texas, Arizona, California, and Nevada, among other top destinations for New York-area travelers. Illinois, home of the busy Chicago airline market, now has a similar quarantine. Same for Boston’s home state Massachusetts. And so on. Will Florida impose a quarantine on people arriving from Texas? Texas on people arriving from California? California on arrivals from Arizona? The point is, even domestic travel is becoming impractical for more and more Americans.
- For United, all of this translates to a huge Newark problem. Located in New Jersey, just across the river from Manhattan, Newark was actually a bright spot in the recovery during the first half of June. The northeast region of the U.S. was performing well in terms of containing the pandemic (no state better than New Jersey, in fact). And travelers there were feeling more confident about taking trips.
But then came the imposition of the quarantine rules on June 24, which were broadened to include more states on June 30. Now United reports a precipitous drop in Newark bookings. The airline more generally spoke of reduced demand to destinations experiencing increases in Covid cases. Aside from the U.S. South, case numbers are rising rapidly throughout Latin America, as well as the Indian subcontinent. Russia and South Africa too, are notable hotspots.
- The faltering U.S. airline recovery spells bad news for airline workers. United, fearing the worst, warned employees that it might have to furlough or outright dismiss up to 36k U.S.-based workers (furlough signifies the opportunity to come back if and when the company needs you). That’s almost 40% of the 96k workers on its payroll at the start of this year. According to federal law, companies must warn employees of mass layoffs at least two months in advance, and Aug. 1 will be two months before airlines are permitted to dismiss workers involuntarily (they’re protected by the CARES Act legislation until Oct. 1).
United isn’t alone. American said earlier this month that it has tens of thousands of excess workers, based on its best guess of future demand conditions. Delta issued a furlough warning to 2,500 of its pilots. And so on. In United’s case, pilot, flight attendant, mechanic, customer service, and management jobs are all at risk, though the 36k number could wind up being lower, perhaps considerably so, if demand turns out better than expected, or if more workers agree to leave voluntarily, induced by company enticements like future health and travel benefits. Currently, more than 20k United workers are on some form of voluntary temporary leave.
Unions generally acknowledge the need to downsize given the demand catastrophe. But they’re hoping Congress steps in with job protections that extend beyond Oct. 1. Congress is debating some sort of broad follow-up economic stimulus now. Airlines themselves, however, are not lobbying for additional government aid, having already received a large amount and wary of a political backlash in a presidential election year.
United, remember, is a more international business than any of its U.S. peers, which doesn’t bode well for its near-term recovery prospects. A smaller work force will help cut costs, though note that union rules typically require junior employees to lose their jobs first, meaning airlines will be left with staff earning higher average wages and benefits. That wouldn’t be as much of an issue if demand were to rebound. But United, in addition to its sobering comments about Newark bookings, said it sees demand remaining suppressed until a widely accepted Covid treatment or vaccine is available.
As recently as June 15, the carrier sounded more upbeat, highlighting “steady improvement in domestic demand.” At the time, it saw July revenues rising 50% to 100% from their June levels. The actual increase now seems likely to be closer to the 50% figure. Industry, capacity meanwhile, is outpacing the demand recovery. Domestic ASMs for July, United said, were down 53% y/y. But RPM traffic was down 72%, and passenger revenues were down 81%. United itself cut ASMs 88% last month, with plans to cut 75% this month, 65% next month, and roughly 65% for the remainder of 2020. Demand, it added, “won’t move in a linear path.”
- With that kind of uncertainty, better borrow some more money. United sure enough drew down another $1b from a revolving credit line with its close banking partner JPMorgan. Not stopping there, the airline signed a letter of intent to borrow money from the U.S. Treasury. Delta, Southwest, Alaska, and JetBlue did the same last week, following American, Spirit, Hawaiian, and SkyWest a week earlier. As Delta made clear though that in its case anyway, it doesn’t necessarily want the money. It just wants to have terms settled so the money’s there if needed (it must decide by Oct. 1).
All U.S. airlines are clearly worried about an extended slump threatening to drain more and more of their cash — more worried today than just a week or two ago. Lucky for them, funding is widely available. But all the borrowing will take years to pay off. Binge borrowing also puts airlines at risk of losing valuable collateral. It’s meant restrictions on their use of cash (i.e. no fat executive bonuses). And it’s led to government ownership rights, albeit absent any intent by Uncle Sam to exercise management influence.
- Delta CEO Ed Bastian, in a letter to employees, joined United in expressing worry about the faltering recovery. He spoke of “renewed caution” amid the Southern spikes and Northern quarantines. This week, Delta kicks off an unprecedently grim Q2 earnings season. “The pathway out of the pandemic,” Bastian wrote, “will be choppy.” Delta is strongly encouraging more workers to accept voluntary leave with generous benefits. The more volunteers it gets, the fewer involuntary layoffs it will need to have.
- Allegiant’s June traffic data show a y/y decline, measured by RPMs, of just 45%, not terrible considering the circumstances. ASM capacity only declined 18%, and actually increased y/y on some peak days. Load factor dropped to 57% from 86% a year ago. These are about the least bad numbers you’ll see for June of any airline worldwide. Allegiant also booked more than $4m a day in new travel last month, ahead of expectations. Likewise, daily cash burn wasn’t as bad as expected (less than $1m a day for the entire second quarter).
But hold your horses. Allegiant is also seeing the latest Covid spike negatively impact bookings into Q3. As of right now, it still plans to operate a full three-quarters of its normal Q3 schedule. But it’s prepared to “make any necessary adjustments.” Allegiant by the way, paid $1.08 per gallon for fuel last quarter, even as prices rose to $1.17 by June. That’s extremely cheap fuel.
- One final note of stalled momentum from Skift’s Brian Sumers, who spoke with Sun Country. A spokesperson there said the carrier is indeed seeing a slowdown in demand after peaking in the third week of June. It’s “not a precipitous dip, but definitely a plateau that is below last year and below where it needs to be.” As of this writing, Sun Country’s home state Minnesota does not have any quarantine rules in place. But even with the opening of Disneyworld in Orlando last week, and families eager to hit the beach, a thinning pool of would-be vacationers are willing to venture to a viral hot zone.
Busiest U.S. Airports
|Dallas DFW||4,399||Atlanta ATL||580,481|
|Atlanta ATL||4,249||Dallas DFW||528,803|
|Chicago ORD||3,905||Denver DEN||495,184|
|Denver DEN||3,592||Chicago ORD||411,563|
|Charlotte CLT||2,982||Los Angeles LAX||366,836|
|Los Angeles LAX||2,311||Charlotte CLT||321,560|
|Seattle SEA||2,291||Las Vegas LAS||320,903|
|Phoenix PHX||2,034||Orlando MCO||299,779|
|Las Vegas LAS||2,016||Seattle SEA||296,476|
|Detroit DTW||1,823||Phoenix PHX||286,111|
- Seats scheduled from U.S. airports last week (July 5-11)
- United is hardly the only giant airline with plans to gut its workforce. Lufthansa’s job slaughter could be just as bloody. Europe’s largest airline group by revenues has something like 22k surplus workers, which could be more or less depending on how fast demand recovers, and the outcome of concession talks with unions. It’s reached a deal with just one major union so far (its flight attendants). Lufthansa announced another round of painful reforms last week, this one involving management and administrative downsizing. The good news is that liquidity is no longer a concern thanks to a massive government bailout. The bad news is that the bailout came on onerous terms, leaving the company heavily indebted.
Lufthansa has already said it would take 100 planes out of its fleet, 22 of which are already gone (A380s, B747-8s, and some A320s). It will take no more than 80 new planes by 2023, implying a 50% cut to capital spending. As for its reactivation of flying, Lufthansa is relatively aggressive, with plans to operate about 40% of its normal autumn capacity, serving 90% of its European destinations and 70% of its intercontinental destinations. Put another way, it’s flying to most of the cities it typically serves but with lots less capacity.
But the recovery will take “multiple years.” The group’s giant maintenance unit will be a drag on earnings for a while too, with so many planes around the world grounded. Management does expect cash flows to stabilize by year end. Longer-term, once conditions improve enough, Lufthansa wants to sell more stock to improve its equity position, repay its bailout obligations, and eventually recapture an investment grade credit rating. The bailout itself was a tough pill to swallow, surrendering a big ownership stake to Berlin. But executives say they managed to balance the interests of six key stakeholders: shareholders, creditors, customers, business partners, employees, and German taxpayers.
As for the state of public health and economic health in Germany, it ranks near the top in both categories. That’s not to say the pandemic hasn’t dealt a painful blow. But Covid is largely under control, the economy doesn’t depend much on tourism, and Berlin used its ample fiscal firepower to support companies and households.
- There’s more news to report about Lufthansa. Die Welt and other German news sources say the carrier is readying a new leisure airline, something it was already working on before the crisis. Though referred to internally as “Project Ocean,” the Die Welt report quoted a Lufthansa spokesman who said the new entity won’t be marketed with a separate brand. It will merely assume responsibility for certain leisure flights previously operated by Eurowings, Brussels Airlines, and Sun Express.
The group already has a template of success for longhaul leisure flying in Edelweiss, based in Switzerland. Ocean will itself be based in Frankfurt, presenting new competition for TUI and Condor, the latter once part of Lufthansa, and nearly just swallowed by LOT before the Polish carrier got cold feet. Lufthansa might have bought Condor itself were it not for potential antitrust concerns.
Why is Lufthansa so keen on launching a new airline unit during an apocalypse? Partly to clean up its own mess, after years of watching Eurowings badly bleed money on longhaul flights. It likely also wants to reduce dependency on premium corporate demand, which some say faces structural demand damage in the age of Zoom calls. Leisure demand, meanwhile, is widely expected to lead the current recovery. Frankly, the potential success of Ocean could come down to its labor costs, which are surely a topic of discussion in Lufthansa’s current union negotiations.
- Salvation is nearing for Virgin Atlantic. Or so it seems as U.K. and U.S. news reports point to an imminent deal to secure new capital from a U.S. hedge fund. Founder Richard Branson will reportedly contribute to the recapitalization as well. Delta would help by foregoing some fees. The key hang-ups, though, according to Sky News and Bloomberg News, involve negotiations with aircraft lessors and credit card processors. The latter can be silent killers for airlines, holding back essential cash during times of greatest need. IAG in fact said last year that one reason Air Europa felt the need to sell itself was liquidity concerns tied to credit card holdbacks. Flybe had this problem. So did a prior incarnation of Frontier in the U.S.
- Send an SOS for SAS: The Swedish-headquartered airline said bondholders will not accept an offer to convert their debt to shares. The problem is, without their acceptance, SAS won’t qualify for a capital injection by three key shareholders, two of them being the Swedish and Danish governments. The carrier continues to engage with the bondholders, though it warned earlier that it might have to file for bankruptcy if its taxpayer-supported recapitalization plan doesn’t materialize.
- The Dart Group, owner of the British LCC Jet2, reported its financial results for the 12 months that ended in March. The period included only about two weeks of Covid distress, which started when the airline was forced to ground all of its flights in mid-March. The full-year results were thus not overly impacted and were in fact rather strong, supported by double-digit traffic growth. Revenues for the airline, including its higher-margin holiday package division, rose 21%. It opened new routes to Greece, Bulgaria, and Turkey last summer. It took advantage of Thomas Cook’s demise to grab peak summer slots at Manchester, Birmingham, and London Stansted airports. It added slots at Greek island airports as well. It grew its fleet to 100 planes last summer, flying from nine U.K. bases.
During the past few months, Dart Group’s top priority has been raising liquidity, via government-supported lending, issuing new stock, and selling a distribution business unrelated to aviation. Attention now turns to restarting flights this week, for the first time since March. Jet2 hopes to salvage some peak season revenue, before a fuller restoration of flights this winter. It said little about bookings for this summer but noted “satisfactory” demand for the upcoming winter half, which starts in October. It sees “encouraging” demand trends for summer 2021, though it’s still early.
Prior to the crisis, Jet2 had become the third-largest British airline by passenger traffic, behind only British Airways and easyJet. It markets itself as a friendlier, more service-conscious LCC than Ryanair, and one in which half of customers purchase package products. Job cuts were inevitable. But future prospects are bright, it insists, after travel restrictions and virus fears ease. “Even when times are tough and disposable incomes tight, one of the very last discretionary items to be sacrificed is the family holiday.”
- South Korea, widely praised for its effective response to the Covid pandemic, saw a 24% y/y drop in domestic passenger volumes last month. At Seoul’s domestic-oriented Gimpo airport, the drop in June was only 20%. Jeju, a popular island resort, saw a 27% decline in domestic traffic. All things considered, these are relatively bullish numbers. But domestic traffic alone won’t do much for Korea’s airlines, not even its shorthaul LCCs. Not until international markets open will carriers like Korean Air, Asiana, and Jeju Air have any chance of making money again. The country has experienced some small Covid outbreaks lately, but nothing even close to what the U.S., Brazil, or other hotspots are currently suffering.
- Here’s a surprise: Brazil’s Gol said it earned an operating profit during the second quarter, minus one-off accounting losses anyway. It expects to report a positive operating margin between 3% and 5%, with cargo, loyalty, other ancillaries accounting for 35% of total revenues. ASK capacity and RPK traffic both declined 92% y/y as the airline flew just a skeletal schedule. But the flights it did operate flew 77% full and produced $122m in revenue. Unit revenues rose an estimated 30%, with big help from strong cargo yields.
Most importantly right now, Gol says it has more than 12 months of cash, a reassurance for investors watching warily after three of Latin America’s biggest airlines filed for bankruptcy. This month it’s operating about 25% of normal capacity using 36 planes. It secured concessions from workers. It raised money through an advanced sale of Smiles Miles. But even with its modest Q2 operating profits, however miraculous that sounds, Gol will report heavy net losses and continues to burn more cash than it generates each day. Brazil, meanwhile, is a Covid nightmare story. Only in the U.S. have more people died of the virus.
- Israel’s El Al survived this long without a bailout, barely. But now it has the support it needs. The country’s government will guarantee three quarters of a $250m loan for the airline. And it will buy any portion of $150m of newly-issued stock that’s not purchased by the public. Assuming the transaction is completed, El Al would once again become a state-controlled airline, with the government holding a 61% stake. It’s not a done deal though, and reports are emerging of a possible private sector suitor. The government deal, importantly, is contingent on achieving lower labor costs through job cuts, a matter causing great management-union tensions at the airline. According to Globes, El Al has concession agreements from three of its four main work groups. Pilots are the lone holdout.
- On Tuesday, Air Arabia’s new Abu Dhabi joint venture with Etihad will take to the skies. The first flight will be to Alexandria in Egypt. A day later, the new airline will open service to Sohag, also in Egypt. Last week, Wizz Air began flying to Abu Dhabi, but not with its new unit based in the U.A.E. That operation will get started later this year.
- Still no resolution. South African Airways is not relaunching in its current form, that’s for sure. But with most unions coming around to accepting mass layoffs in exchange for severance pay, a smaller relaunched national airline is becoming more of a possibility. Creditors will soon vote on a long-delayed proposal that would use SAA’s assets to create a new airline, rather than liquidate the old carrier. But bankruptcy administrators warn that even the new carrier will require government funding. Unless that is, it can secure capital from a foreign investor. Who would invest? The best hope is Ethiopian Airlines, though its intentions are unclear.
With rivals distracted, JetBlue strikes.
While others play crisis-time defense, JetBlue is playing offense.
Last week, the East Coast carrier made a big West Coast move, the latest in a string of recent network maneuvers. Already a big player in the nation’s largest city New York, it’s now making a play for its second-largest, Los Angeles. From LAX airport, the city’s main gateway, JetBlue will more than double the destinations it offers this fall. Pre-crisis, it flew just transcontinental routes from LAX — to New York JFK, Boston, Buffalo, and two Florida cities (Fort Lauderdale and Orlando). Now it’s adding shorthaul routes within the U.S. West, to San Francisco, Seattle, Las Vegas, Reno, Salt Lake City, Bozeman, and Austin.
Far from being just a short-term tactical play, the LAX offensive signals a long-term emphasis on making the airport a centerpiece of its West Coast strategy. By 2025, JetBlue hopes to offer 70 daily flights, up from about 20 pre-crisis and about 30 this fall. The future expansion will also involve new routes, including international routes. Some it has in mind, the airline said, have never before had nonstop service from LAX.
To be clear, JetBlue’s aggressive moves in Los Angeles don’t reflect overall capacity growth. As with all U.S. airlines right now, its capacity is sharply down from last year’s levels, in response to drastically reduced demand. Soon, it will present its Q2 financial results, providing more detail on exactly how much flying it will do this fall. But October’s new LAX flying won’t represent net new flying. Instead, the carrier will fund the growth by retreating from neighboring Long Beach.
Why? Long Beach was one of JetBlue’s earliest markets, joining the network just months before 9/11, when the carrier was just two years old. It’s a well-liked airport, in an area with a relatively wealthy demographic. But it’s an airport that’s long frustrated JetBlue, with strict noise regulations, night curfews, and slot constraints. Most frustrating was a local government decision to nix a plan to allow international flights, which in turn nixed JetBlue’s vision of linking Long Beach with resort destinations in Mexico and Central America. In 2016, Southwest entered the market. By 2019, JetBlue had lost interest, flying fewer seats from Long Beach last year than it did 15 years earlier. Brett Snyder, author of the Cranky Flier blog, has long chronicled the ups and downs of JetBlue at Long Beach, noting often how it’s the carrier’s least profitable focus city, making it ripe for closure. In January, just weeks before the onset of the Covid crisis, the airline announced another Long Beach downsizing. This fall, it will be gone from the airport completely.
JetBlue says that LAX, by contrast, is one of its “most successful markets.” It started flying there in 2009, taking advantage of opportunities presented by a previous industry crisis. Always eager to build more West Coast exposure beyond its transcon flying, it boldly offered to buy Virgin America in 2016. Alaska, though, was willing to pay more. New opportunities are arising with the current crisis, as American for one dismantles much of its intercontinental flying from LAX. That heralds a possible domestic downsizing there, and the sudden availability of scarce gates and other facilities. American, based on 2019 schedules, is the largest airline at LAX by any capacity measure.
Unfortunately for JetBlue, American — however extensive its retreat — is far from the only airline fighting for La La Land supremacy. Delta and United are major players in the market, as is Alaska following its Virgin takeover, and more recently its deepening partnership with American. Then there’s Southwest, a California powerhouse which largely abstains from the big money transcon routes but otherwise offers extensive national coverage from LAX. Spirit has quietly amplified its presence at LAX, ending 2019 with a portfolio of 17 routes, according to Cirium schedule data. If JetBlue has eyes on Hawaii, it will have to compete with six different airlines, including Hawaiian and Sun Country. If it wants to fly to Mexico, the Caribbean, South America, or Canada, it will have to compete with a bevy of foreign carriers.
Tough competition though, doesn’t frighten JetBlue. Not judging from a separate major move announced last month, back on the East Coast. The airline is storming United’s Newark hub, attacking its two most important domestic routes from the airport. Los Angeles is one, further advancing its Southern California ambitions. The other is San Francisco in Northern California. JetBlue will use its Mint-equipped A321s, offering a lower-fare premium product that management bets will work well in the post-pandemic era of corporate belt-tightening. Hardly stopping there, the LCC will launch Newark flights to San Diego, Phoenix, Las Vegas, Austin, Charleston, Jacksonville, and Sarasota before the end of this summer.
It’s adding new Florida routes too, and new routes from New York JFK to Detroit, Minneapolis, and Dallas DFW, betting Delta and American won’t have the stomach to launch retaliatory battles at a time when preserving cash is job one. United, meanwhile, as it slashes its workforce, could find it loses more than just skilled and loyal workers — it could lose valuable Newark customers.
JetBlue emphasizes that some of its new flying might be temporary. Put another way, it’s an opportunistic play to justify the ungrounding of more aircraft, and the retention of more employees. Most of the new routes, even if they don’t earn profits in the strictest accounting sense, should at least cover their direct operating costs, especially with fuel prices so low. If they indeed cover operating costs, they won’t burn — and might even earn — cash. As other airlines have likewise demonstrated, network planners are tossing aside old pre-crisis principles like offering a stable schedule for business passengers. Instead, they’re adding and removing flights on short notice, adapting to a highly-unpredictable, severely-depressed demand environment, in which most customers are booking their tickets close to departure. Make no mistake though: JetBlue would love to remain in markets like Newark-to-California permanently.
The airline, meanwhile, hasn’t forgotten about Europe. Pre-pandemic, it planned to launch London flights with long-range Mint-equipped A321 NEOs from both New York JFK and Boston. Its original 2021 timetable might be delayed, but the intention remains. In fact, the crisis should make it easier to secure notoriously hard-to-get slots at London Heathrow. Well-timed slots will be easier to come by at London Gatwick too, if it chooses to fly there. Ditto for other European airports like Amsterdam and Paris. Dublin, Manchester, or Edinburgh could all make sense for JetBlue too. So might deep South America routes within range of the NEO LRs.
Many other aspects of JetBlue’s pre-crisis strategy remain valid. It’s excited about getting A220s, which will debut as E190 replacements in Boston. Lots of standard-range A321 NEOs are also on the way. The airline’s TrueBlue loyalty plan, with its associated Barclays-issued credit cards, remains a longtime source of revenue growth, perhaps aided by a bigger footprint in Los Angeles. Plans to cooperate with Norwegian will take a pause as both carriers deal with the crisis. But partnerships are another important revenue source for JetBlue, here again with potential to benefit from more LAX flying.
Delayed but still relevant is a revamp of aircraft interiors to include more seats but also more amenities. It’s no longer shy about charging for bags or matching rivals with basic economy fares. JetBlue Travel Products, focused on ancillary opportunities, will still be a priority. Network-wise, Boston business markets, New York leisure markets, and transcon markets in general will remain core to the JetBlue business model. Same for leisure and family-visit markets to the Caribbean, Mexico, and upper South America. Same for Florida, as both a destination market for northeasterners but also a growing origination market as the state’s population booms. Fort Lauderdale was its third-busiest airport last year by seats (Cirium) after New York JFK and Boston. Orlando ranked fourth. Puerto Rico and the Dominican Republic are its two busiest Caribbean markets.
None of this changes, post-crisis, even as it plays offense in Los Angeles and Newark while rivals are preoccupied with damage control. But JetBlue has its own damage control to do. Last week, its head of revenue and planning Scott Laurence told Skift’s Brian Sumers that he’s seeing a dip in demand. “We have certainly seen things slow, particularly in the quarantine-impacted east coast markets.” Earlier, it felt better positioned than most, with so much leisure traffic to Florida, a market that led the industry’s traffic recovery from May through mid-June. Now its heavy Florida exposure could be a liability.
Currently, JetBlue is still blocking middle seats. Like all U.S. airlines, it’s taking on more debt. Shorthaul markets like those connecting upstate New York with New York City have been particularly depressed all spring. Overstaffing could become a problem after promising no pilot layoffs through next spring. As rivals cut more aggressively, JetBlue could lose some of its cost advantage.
Maybe. But as its mid-pandemic network maneuvers show, JetBlue is intent on using this crisis to its advantage. During the 2009 financial crisis, incidentally, it marched not only into LAX but also into Caribbean markets that American felt compelled to abandon. JetBlue also seized the opportunity to enter the premium transcon market. Will its latest moves prove equally enriching? Or is now not the time to play offense?
A look at the world’s airlines, including end-of-week equity prices
Around the World: July 13, 2020
|Airline Name||Change From Last Week||Change From Last Year||Comments|
|American||-4%||-64%||Postponing relaunch of Hong Kong flights amid dispute about Covid testing requirements for crews; United also halting Hong Kong flights|
|Delta||-2%||-55%||Says Miami, where it hints of hub ambitions, accounts for a full quarter of all U.S. airline demand to South America|
|United||-4%||-63%||Adding back some B787 flying from LAX following American’s move to cut many of its Asian routes|
|Southwest||-3%||-36%||Travelport says it’s winning new travel agency contracts after adding access to Southwest’s flights and fares|
|Alaska||-2%||-44%||Tells Aviation Week it might join oneworld alliance by the end of this year, roughly six months ahead of schedule; forging deep ties to American|
|JetBlue||-1%||-43%||Currently employs about 150 people at Los Angeles LAX base; number will now approach 700|
|Hawaiian||-1%||-49%||Only 9,116 visitors came to Hawaii by air in May, vs. 841,376 in May, 2019 (Hawaii Tourism Authority)|
|Spirit||1%||-66%||Disneyworld in Florida reopened this weekend, despite explosion of new Covid cases throughout Florida|
|Frontier||(not publicly traded)||Reuters: If Florida were a country, it would rank fourth in the world for the most new Covid cases in a day behind U.S., Brazil, India; 15k cases on Sunday|
|Allegiant||1%||-24%||Carried nearly 6% of all U.S. travelers last month, based on TSA checkpoint data; this is much higher than normal|
|SkyWest||-3%||-50%||New York Times article looks at rapid change in pilot market, from shortage to surplus|
|Air Canada||-6%||-61%||Though Canadian gov’t offering only limited financial relief, its permissive attitude on allowing credits instead of cash refunds has helped airlines preserve cash|
|WestJet||(not publicly traded)||Charter firm Norlinor planning scheduled flights from Quebec to sunshine spots under the brand Off We Go (Routes); has ten B737-400s|
|Aeromexico||-10%||-75%||Mexican President AMLO flew commercial on Delta to U.S. for meeting with President Trump|
|Volaris||-6%||-38%||Mexican government reiterates its opposition to an airline bailout|
|LATAM||-1%||-84%||Says surprisingly that nearly 80% of all pax travelling between Sao Paulo and New York are doing so for leisure rather than business|
|Gol||7%||-48%||Removed 11 leased B737s in the first half of 2020, 7 more this half, and up to 30 more in 2021 and 2022; can drop even more if needed|
|Azul||4%||-56%||To aid airlines in their recovery, Brazil no longer charging $18 international departure tax|
|Copa||-3%||-51%||Operations currently suspended through August 7; relaunch depends on int’l border controls|
|Avianca||-5%||-87%||Colombia, unlike most countries, not even allowing domestic flights; Avianca carried zero scheduled passengers in May|
|Emirates||(not publicly traded)||President Tim Clark, in his interview with The Times (see media section), says Emirates acting like a mini-UPS with lots of pax jets converted to freighters|
|Qatar||(not publicly traded)||Saudi Arabia unveils plans for new Red Sea resort city airport scheduled to open in 2023 (Routes)|
|Etihad||(not publicly traded)||Partnering with London-based Travelfusion to advance NDC distribution capabilities|
|Air Arabia||-3%||7%||New Abu Dhabi JV will codeshare with Etihad’s mainline operation|
|Turkish Airlines||-1%||-4%||Low-cost unit Anadolujet starting service to Tel Aviv, Israel, this week from Istanbul SAW|
|Kenya Airways||0%||-25%||Trying to cut jobs to preserve cash but facing resistance in Kenya’s courts|
|South Africa Air.||(not publicly traded)||CNN Travel profiles FlySafair, a South African LCC that uniquely hasn’t filed for bankruptcy (SAA and Comair have)|
|Ethiopian Airlines||(not publicly traded)||Bankrupt Air Mauritius restarted domestic flights this month, but int’l flights won’t restart until September|
|IndiGo||0%||-25%||Tells Economic Times that travel restrictions by individual Indian states hurting demand recovery|
|Air India||(not publicly traded)||Tata Group, the largest shareholder in Vistara and AirAsia India, still the most likely buyer of Air India, writes the Economic Times|
|SpiceJet||-1%||-58%||Looking at wet-leasing some widebody planes for charters, the Times of India reports|
|Lufthansa||-3%||-42%||CEO of Edelweiss, its Swiss leisure unit, tells Handelszeitung it doesn’t plan any layoffs|
|Air France/KLM||-4%||-53%||Amsterdam handling 40k to 60k pax a day this month; typical July day would see 210k|
|BA/Iberia (IAG)||-7%||-53%||Now closing its longhaul Level operation in Paris, following its closure of shorthaul Level based in Vienna; LCC still flying from Barcelona|
|SAS||0%||-42%||Filled 52% of its seats in June, down 29 points y/y|
|Alitalia||(not publicly traded)||Corriere della Sera analysis: Alitalia lost 13 euros for every passenger it flew in the past 15 years; was 24 euros last year|
|Finnair||-23%||-92%||Icelandair’s flight attendants reject concessions negotiated by their union; puts out-of-court restructuring plan in jeopardy; does bankruptcy loom?|
|Virgin Atlantic||(not publicly traded)||Some British politicians want to confiscate London Heathrow slots from British Airways if it slashes payroll|
|easyJet||-5%||-31%||Crisis might be opportunity to obtain more slots at key airports|
|Ryanair||-4%||3%||New Irish pilot deal minimizes job cuts but reduces pay by 20% over four years, gives management more crew scheduling flexibility and productivity|
|Norwegian||-2%||-93%||Planning to reopen Norwegian Argentina. Just kidding.|
|Wizz Air||-4%||-7%||BNE IntelliNews looks at Romanian LCC Blue Air, which was profitable last year but now faces a Covid-caused debt crisis|
|Aegean||-4%||-53%||Covid cases rising in Greece as tourists arrive; U.K. arrvials welcomed starting this week|
|Aeroflot||1%||-25%||Hoping to reach agreement with selected countries on reestablishing flight links as early as this week|
|S7||(not publicly traded)||Launches new advertising campaign to promote summer destinations|
|Japan Airlines||-2%||-45%||Sets July 25 as launch date for its new joint venture with Malaysia Airlines|
|All Nippon||-4%||-36%||Highest levels of Japanese government discussing border relaxation with neighboring Asian countries|
|Korean Air||-6%||-41%||Selling its catering and duty-free businesses to raise cash as tough times endure|
|Cathay Pacific||-7%||-42%||Severely distressed rival Hong Kong Airlines stiffing bondholders by missing interest payments (SCMP)|
|Air China||0%||-39%||China the world’s only major economy expected to grow rather than shrink this year, albeit just a little|
|China Eastern||4%||-23%||Gov’t announces new rule: flights to Shanghai cannot have a load factor higher than 75%|
|China Southern||4%||-24%||Stock price increases amid broader jump last week in Chinese equity markets|
|Singapore Airlines||-2%||-60%||Indonesia’s Garuda saw its domestic yields jump 29% last year; jumped 45% at its LCC Citilink; airfares in Indonesia highly regulated|
|Malaysia Airlines||(not publicly traded)||Working with Houston-based PROS to advance its revenue management capabilities|
|AirAsia||-13%||-73%||Sees a four-stage recovery: 1) domestic, 2) intra-ASEN int’l, 3) North Asia and India int’l, 4) longhaul intercontinental|
|Thai Airways||-5%||-63%||Thai AirAsia considering flights from Bangkok’s main airport, alongside its operation at Don Muang (The Nation)|
|VietJet||0%||-18%||One more note about AirAsia: It says 80% of its customers disrupted by flight cancellations have opted for credits rather than cash refunds|
|Cebu Pacific||-4%||-56%||Plans to upgrade Manila’s main airport in flux as several backers withdraw interest|
|Qantas||-8%||-39%||Big setback in domestic recovery momentum: Melbourne virus outbreak causes border closure between Victoria and New South Wales|
|Virgin Australia||0%||-48%||Bondholders, which stand to lose much of what Virgin owes to them if Bain takeover deal goes through, fighting to stop it|
|Air New Zealand||-9%||-50%||The Guardian reports a big increase in Americans seeking information on moving to New Zealand|
|Brent Crude Oil||1%||-35%||OPEC cartel to meet this week; could ease production cuts|
Some stocks traded on multiple exchanges; not intended for trading purposes.