China's Uncertain Recovery

Pushing Back: Inside This Issue

U.S. airlines sounded common themes as they disclosed gargantuan second-quarter losses. Demand recovery was promising, until it wasn’t. Costs are down sharply, but more painful labor cuts are necessary. Corporate and international traffic volumes remain negligible. Carriers are dialing back planned capacity for the fall. There’s more than enough liquidity on hand to endure current rates of cash burn. Only with a Covid-19 vaccine, airlines seem to agree, will demand conditions start to normalize.

American is thinking strategically during the crisis, addressing its network deficiencies with domestic alliances. United is playing a more conservative game for the moment, operating fewer flights and in fact losing less money and burning less cash than its peers. Thanks to enthusiastic interest in voluntary job separation offers, Southwest said it won’t have to cut jobs or pay involuntarily, a minor miracle considering the circumstances. (Herb Kelleher would be proud). Alaska will team with American and join oneworld while navigating the crisis. Spirit insists its cost advantage will endure.

In Europe, Finnair recorded massive Q2 losses, just like everybody else. More importantly right now, it’s happily in the category of airlines without short-term liquidity concerns—not after a government-backed fundraising spree. Things in Europe get really interesting this week as Air France/KLM and IAG report results. So do the continent’s most successful low-cost carriers: Ryanair and Wizz Air.

They’ll be far from the only ones reporting Q2 earnings this week. Air Canada, Singapore Airlines, and ANA are some other heavy hitters scheduled to report.  

Verbulence

"It’s not only about raising new debt and it’s not only about raising new equity. We need to adjust our operations to new reality."

Finnair CEO Topi Manner

Mondays With Skift Airline Weekly

Brian Sumers, Skift senior aviation business editor, and Airline Weekly Editor Madhu Unnikrishnan discussed why the heads of four airlines would ask governments to ease transatlantic travel restrictions while the pandemic still rages. And why is there such an enduring love for the B747?

Earnings

April-June (3 Months)

• American: -$2.1b/-$3.4b*; -256%
• United: -$1.6b/-$2.6b*; -209%
• Southwest: -$915m/-$1.5b*; -214%
• Alaska: -$214m/-$439m; -139%
• Spirit: -$144m/-$286m*; -247%
• Finnair: -$191m; -254%

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