Issue No. 781

No Soft Landing: Airports in for a Bumpy Ride

Pushing Back: Inside This Issue

It’s nice to be a major cargo carrier right now. China Airlines joined Korean Air and Asiana in the exclusive club of airlines that actually made money last quarter, all thanks to carrying stuff rather than people. Taiwan’s EVA Air earned a small operating profit thanks to cargo as well. Cargo was a cushion but not a savior for Cathay Pacific and Turkish Airlines, both major players in the global passenger business.

In Brazil, Azul sees some signs of life in the domestic market. Bankrupt Avianca has a new financing deal that breathes life into its recovery efforts. Life is made tougher for Cebu Pacific by inconsistent local travel restrictions.

A thaw in relations between Israel and the UAE heralds big potential changes for the Tel Aviv market, which could soon welcome Emirates as a challenger to other sixth-freedom players like Turkish Airlines. For sixth-freedom traffic to regain relevance though, the world needs to get control of Covid-19. The struggle is seeing setbacks in Europe, where a spike in cases threatens what has been a decent shorthaul leisure recovery. The case numbers are still tiny compared to those seen in the U.S., however. In Florida, where Covid-related deaths are approaching 10,000, there’s hope that the scourge will ease by the winter peak. United, positioning itself to take advantage of an improved situation, announced a laundry list of new Florida flights starting November and December. 


"The impact of COVID-19 has been severe, but it will pass."

Sydney Airport CEO Geoffrey Culbert

Mondays With Airline Weekly

Peter Cerdá, IATA regional vice president-the Americas, joins host Madhu Unnikrishnan for the livestream at 12 p.m. EDT, Monday, Aug. 17. Join us for a discussion on Latin America's airline industry and what governments could be doing for the region's airlines. Registration is free for subscribers.


April to June (3 Months)

  • Turkish Airlines: -$327m; -26%
  • Thai Airways: -$167m/-$437m*; -361%
  • EVA Air: -$24m; 1%
  • China Airlines: $75m; 10%
  • Avianca: -$232m; -64%
  • Azul: -$544m/-$278m*; -204%
  • Cebu Pacific: -$158m/-$141m*; -443%
  • Pegasus: -$133m/-$94m*; -355%
  • Air Arabia: -$65m; -173%
  • Jazeera: -$13m; -54%
  • Chorus/Jazz: $21m/-$23m*; -11%
  • Mesa Air: $3m/-$40m*; -38%

January-June 2020 (6 Months)

  • Cathay Pacific: -$1.3b/-$891m*; -23%

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

Note from the Editor

This issue is our last issue until Sept. 8, 2020. We'll be taking our annual summer hiatus. We'll still be around, though! Check AW Daily for airline industry news and updates. We hope you enjoy the final two weeks of August, and we'll be back with our weekly issues in September.

Weekly Skies

  • It describes itself as the world’s third-largest cargo airline. But even at a time of surging cargo yields, this didn’t help Hong Kong’s Cathay Pacific avoid a mammoth $1.3b net loss for the first half of 2020 (it didn’t disclose Q2 figures alone; it reports only semiannually). Excluding special items like aircraft value impairments, Cathay’s H1 net loss was more like $891m, still a gruesome result. And that included about $130m in government grants. Operating margin was negative 23%.

    In 2019, the airline surprisingly managed a small profit, with cheaper fuel and internal cost cutting an offset to terrible demand conditions in both the passenger and cargo realms. Cargo, typically a quarter of total revenues, suffered from U.S.-China trade tensions last year. Passenger traffic suffered from civil unrest that began last August. Going further back, Cathay was a money-losing airline in 2016 and 2017, a testament to its longterm problems. The hope was that 2020 would mark a turnaround. Could demand really get any worse than it was late last year? We all know the answer to that now. On January 24, Cathay suspended all flights to Wuhan, China, in response to a mysterious virus. The rest is history.

    Today, the airline’s passenger business is serving just 22 destinations with bare minimum capacity. HK Express, a low-cost carrier it bought last year, was completely shut down through the start of this month. Total H1 ASK capacity was down 66% y/y across the group, which also includes Cathay Dragon. The decline between April and June was 97%. Thanks to the freight boom — H1 cargo revenues rose 9% despite 31% less capacity — total groupwide revenues in the half thus only declined 48% y/y.

    Operating costs, meanwhile, declined 34%. Cathay got a head start on aggressive cost-cutting given the problems it faced before the Covid crisis. But it’s also a notoriously clumsy fuel hedger, losing another $206m from hedges in the last half. Additional losses came from ancillary businesses like catering. Also generating losses was Cathay’s 18% ownership stake in Air China, which had an extremely rough first quarter (Cathay’s results incorporate Air China’s contributions three months in arrears, in this case from October 2019 through March 2020).

    On the other hand, profits increased at Air China Cargo, a separate venture in which Cathay owns a 35% stake. Air Hong Kong, a wholly-owned all-cargo subsidiary, likewise saw profits increase. Management expects the cargo strength to continue through the remainder of 2020. In fact, most of the passenger flights it’s currently operating are earning positive cash returns only thanks to belly cargo. Still, only about a tenth of its normal passenger schedule is currently flying. It’s getting a bit of a passenger demand boost from the recent removal of a ban on transit passengers through Hong Kong airport. Mainland citizens will now be able to use the hub for connections. Sixth-freedom transit traffic between the Philippines and Vietnam to and from North America is picking up. Cathay is also seeing some demand from Hong Kong residents studying overseas. Connecting passengers currently account for about a third of total volumes.

    None of this, however—not even the thriving cargo business—absolved the need for lots of new capital to sustain liquidity while the Covid crisis rages. Hence a $3.5b government rescue, in the form of share purchases and loans. Swire Pacific, Air China, and Qatar Airways, Cathay’s three top shareholders, remain so after the bailout, contributing $1.5b in new share purchases. Cathay will further preserve liquidity by deferring A350 and A320/21 NEO deliveries. It’s in advanced discussions with Boeing about deferring B777-9 deliveries as well. Much of its workforce is on unpaid leave. But there’s more cutting to do as executives ponder just how much flying future demand will be able to support. A new business plan is under development.

    On the competitive landscape, rival Hong Kong Airlines is deeply troubled. But a new startup LCC called Greater Bay Airlines, with links to Shenzhen’s Donghai Airlines, is hoping to fly in the next couple of years, the South China Morning News reports. The Greater Bay name refers to the Pearl River Delta region which incorporates Hong Kong, Shenzhen, and Guangzhou, and which Beijing hopes to develop into a leading global economic center. At the same time, however, Beijing’s recent efforts to exert greater political control over Hong Kong adds uncertainty about the city’s future role in the global economy. Under any circumstances, Cathay doesn’t expect demand to normalize for several years.
  • Istanbul opened a giant new airport for a reason. For the last two years, Turkey’s largest city was among an elite group that handled more than 100m annual passengers. The Turkish airline market, more generally, was for much of last decade one of the world’s busiest and fastest growing. Riding the wave was Turkish Airlines, greatly relieved to leave the hyper-congested old airport, cheaper to serve though it was. Now, nobody’s talking about congestion. Even the tiniest of airports would have sufficed last quarter, when Turkish operated a mere 4% of its normal ASK capacity. Only in mid-March did scheduled passenger flights resume, after roughly three months of suspension due to Covid-19.

    Thankfully though, cargo is a major and growing part of the airline’s business, which went a long way toward mitigating Q2 losses. In fact, Turkish posted the same net loss of $327m in both the first and second quarters. With revenues down much more in Q2, operating margin was worse. But at negative 26%, the loss was among the least bad industry wide. Cargo revenues ballooned by 90% y/y on skyrocketing yields, producing $747m in revenue. That compares to just $115m from passengers. Include all revenues and cargo was 83% of the total. Cargo profit margins were in the double digits. The airline said selling its cargo unit could be an attractive option in the future, especially after Istanbul’s new airport opens a new cargo terminal. Cargo super-yields won’t last forever though, and Turkish will need passenger demand to revive if it ever hopes to be profitable again.

    On a positive note, demand for domestic and shorthaul international travel is showing “mild” signs of recovery since the June reopening. It pointed to Berlin, Paris, and London as three critical routes while rebuilding the shorthaul business. Longhaul though, is a big question mark, not just for this year but into 2021 and beyond. Though Turkish depends more on narrowbody planes than its Gulf rivals, for example, it does have more than 100 B777s, A330s, B787-9s, and A350-900s essential for serving the Americas and East Asia (it smartly never ordered any A380s or B747s, nor B777-Xs for that matter, though these might yet be a useful plane for Turkish one day). Widebodies are also important in lowering the carrier’s unit costs, which management doesn’t see retuning to 2019 levels until 2022.

    That of course depends on getting aircraft utilization back to productive levels. For the second half of 2020, ASK capacity will likely be less than half (about 45%) what it was in the same six months last year. Next year, a lot depends on the status of Turkey’s tourist market, one of the world’s largest. Turkish is a big provider of flights to migrant workers and their families around Europe and elsewhere, most importantly Germany. It’s also positioned Istanbul as a leading gateway in and out of Africa, and a leading hub for niche markets like Israel and Armenia. Tel Aviv is a particularly important market, though one now threatened by the likelihood of Emirates entering the scene (see Routes section).

    Turkish, like all airlines, is taking steps to cut costs and improve liquidity. But two key negotiations are still underway, one with aircraft manufacturers about deferring deliveries and pre-delivery payments, and the other with labor unions. It says it hopes to have new labor savings secured in the coming weeks, with a goal of cutting labor costs by 30% to 40%. It thinks it can do so while avoiding layoffs. Cash burn is sufficient through the end of the year at least, though burn rates will be higher this quarter than last as it puts more planes back in the sky, which requires working capital. Depreciation, by the way, accounted for more than a third of Q2 operating costs. The government is helping in some ways, with partial wage subsidies and laws to facilitate reduced-time working, for example. Ankara also temporarily lowered taxes on domestic air travel. The airline, remember, is 49% government owned, with the rest publicly traded.

    At the moment, shorthaul demand for August looks better than July, and September looks “O.K.” The airline’s best guess for 2021 is ASK capacity down about 15% to 20% from 2019 levels.  
  • Tourism is even more important to Thailand and Thai Airways than it is to Turkey and Turkish Airlines. With passenger air service closed the entire second quarter, Thai incurred a monstrous $437m Q2 net loss ex special items, joined by a negative 361% operating margin. The airline does fly some cargo. And cargo yields sure enough went through the roof. But it didn’t make a material difference in terms of y/y revenue decline, which was 94%. Operating costs, by contrast, declined by only 72%.

    As a noxiously unhealthy airline even before the crisis, Thai was unsurprisingly forced to file for bankruptcy in May. At the same time, Thailand’s government brought its ownership stake below 50%, relinquishing control. The associated low-cost carrier Nok Air, in which Thai started and still holds a stake, also filed for bankruptcy in late July. For much of Thai’s long existence, mass tourism was enough to deliver consistent profits. But the 2010s brought trouble, in the form of much greater competition both domestically and internationally. Thai itself, to paraphrase the often-cited Warren Buffett line, was quickly revealed as a swimmer without trunks. Overstaffing, political interference, excess fleet complexity, and low yields were all problems.

    Can it successfully restructure in bankruptcy? Thailand’s airline market is screaming for consolidation, with Thai AirAsia, Bangkok Airways, VietJet, and Lion Air all competing with Thai and Nok. But barring that, Thai will need to become more productive in terms of labor and fleet. The airline will spend the next few months preparing a new business plan, which could be implemented late next year if all goes smoothly. This week, in fact, it will propose some initiatives before the bankruptcy court. But nothing will work without a return of tourists, from China in particular.

    By the way, if you’re wondering why you never saw Thai’s Q1 results, it’s because they only reported them last week, concurrent with the Q2 results. The takeaway: a negative 12% operating margin despite Q1 being the peak for Thai tourism. Another “by the way” fact: the airline’s auditors did not sign off on the financial results, concerned about its ability to sustain itself given liquidity concerns. 
  • As Korean Air and Asiana showed, it’s not impossible to make money during a global pandemic. By now it’s clear: Cargo is the key. And that’s good news for Taiwan’s two major airlines. China Airlines (CAL), which got 30% of its revenues from cargo last year, and more like a third in a typical year, saw cargo yields roughly double last quarter. That was good enough to catapult CAL into the Q2 winner’s circle with Korean and Asiana. Not only did it earn a profit ($75m net). But its operating margin was a double-digit 10%. That’s how strong cargo was last quarter, with so much belly-hold capacity grounded, and with health care and e-commerce demands soaring. The passenger business basically didn’t exist, as is clear from CAL’s 96% y/y decline in ASK capacity. Actual passenger volumes were down 98%. But thanks to cargo, total revenues fell only 39%. Even better, operating costs fell 44%, which means margins were up y/y. Indeed, during last year’s Q2, CAL’s operating margin was a mere 1%.

    Taiwan is arguably the champion of the world in terms of containing Covid-19, with just seven recorded deaths—Bermuda and Malta have had more. No surprise then, that its economy is actually expected to grow this year, by about 1% or 2% after shrinking slightly last quarter. Longterm, Taiwan’s economy will be greatly influenced by developments in relations with mainland China, which claims the island as its own. Beijing’s more assertive actions of late, in fact, make Taiwan a major geopolitical flashpoint, and a key tension point between Beijing and Washington. For the island’s airlines, both the China and U.S. markets are large, for both passengers and cargo in normal times.

    On a quirkier note, with overseas markets largely closed now, Taiwanese carriers have offered travel junkies much-publicized flights to nowhere, taking off and landing at Taipei’s Songshan airport.
  • CAL’s rival EVA is a big cargo player too, but not quite as big. It typically gets not a third of its revenue from cargo like CAL, but closer to a fifth. Sure enough, it did earn an operating profit last quarter. But operating margin was just 1%. And EVA’s net result was a $24m loss. Operating revenues fell 56% y/y, but operating costs fell only 55%. It kept passenger flights a bit more active than CAL, with ASKs down only 87%. But passenger volumes nevertheless saw a similar 98% decline. EVA has a more North America-centric passenger network than CAL, carrying many nonstop travelers in normal times, but also connecting traffic between North America and the ASEAN region. Restrictions on such transit traffic were lifted in June. Unlike Seoul, Taipei is not a major hub for North America-mainland China traffic, with mainland citizens barred by Beijing from using the airport to connect, for political not health reasons.

    Prior to the global Covid pandemic, Taiwan’s two major airlines had other concerns, including tough foreign LCC competition, trade wars, occasional labor unrest, and the birth of an ambitious new carrier called StarLux, with an order book of NEOs and A350s. Looking ahead, EVA said last month that it expects some Asian carriers including LCCs to perish or merge as a result of the crisis. It also noted how pre-crisis concerns about airport slots and pilot shortages are now “less urgent.” It added that an uncertain cross-Strait relationship with Beijing will complicate and lengthen the recovery period. As for cargo, transporting vaccines as they emerge should be a major area of activity in 2021.

A Less-Rosy Picture in Latin America

  • Forget about finding any airlines earning profits in In Latin America. Instead you’ll find a wave of bankruptcies affecting even the region’s largest and strongest carriers. Avianca is one. It undertook a successful out-of-bankruptcy restructuring process just before the crisis. All the work proved insufficient however, after Colombia suspended all air travel to contain the Covid pandemic. Now restructuring again within the confines of a U.S. bankruptcy court, Avianca last week disclosed a $232m net loss for Q2. Operating margin was a relatively not-so-awful 64% but this included some one-off revenue gains from asset sales; without these gains, operating margin would have been negative 138%. In last year’s Q2, a slow season in South America, Avianca’s operating margin in Q2, 2019, was negative 3%. The airline is now using its bankruptcy rights to renegotiate or walk away from old contracts, with aircraft lessors and bondholders, for example.

    A big priority is finalizing a new deal for $2b in debtor-in-possession (DIP) financing to cover its liquidity needs through the crisis. It’s also planning to use DIP cash to buy back most and potentially all of the 30% stake in its LifeMiles loyalty plan that it sold to investors a few years ago. One earlier move was closing its Peruvian airline operation. Cargo by the way, accounted for 60% of total Q2 revenue, with most of the rest from other business units like LifeMiles. Passenger revenue was less than 2%.

    Colombia’s airline market is still closed as the country and South America in general suffer greatly from the virus, medically and economically. But the intention remains: To transform Avianca into a “highly competitive, right-sized, solidly profitable airline.”
  • The Brazilian carrier Azul echoed the sentiments of most airlines by calling the Covid crisis “the most challenging time in aviation history.” It’s so far managed to avoid the bankruptcy plight of other South American carriers including rival Latam. But it’s fervently restructuring its balance sheet and slashing costs outside of bankruptcy after a $544m net drubbing last quarter. Exclude special items and the net loss was more like $278m. Operating margin was negative 204%.

    But you get the point: Azul like the rest of the airline industry needs to become smaller and leaner. It already has agreements to defer 82 aircraft deliveries. It cut wages by 40%. It more generally variabalized much of its labor obligations, so that costs drop when flying less, and vice versa. Latin governments have been notoriously unhelpful in supporting their airlines financially during these dire times, hence the multitude of bankruptcies. But Brazil did undertake some helpful reforms, including a relaxation of costly consumer protection laws. The government’s development bank is also providing credit support, but it’s hardly a sweet deal and not something Azul currently plans on using. It might not need to after successfully lowering its near-term cash obligations, giving it about two years of liquidity. It also has a wholly-owned loyalty plan to collateralize if necessary. And though it’s selling its ownership position in TAP Air Portugal, money it lent to the carrier won’t be at risk with Lisbon providing TAP a big bailout. With aircraft lessors, Azul negotiated a deal whereby lease obligations for the remainder of 2020 will decline by 77%. In exchange, the carrier will pay slightly higher lease rates starting in 2023, or in some cases agree to extend existing lease terms at market rates.

    Despite Brazil’s terrible experience with the virus, domestic airline demand is recovering at a faster pace than in other parts of the world. Azul aims to be flying about 60% of its normal ASK capacity by December, which is higher than the 40% it envisioned earlier in the crisis. The economy began reopening from lockdown last month, and leisure demand already exceeds 50% of last year’s levels. Azul says business demand is starting to show some green shoots too. Average fares, indeed, have increased in the past few weeks. The airline is also a significant cargo player, with e-commerce shipments announcing for about a fifth of its freight revenues. Management emphasized the advantage of having a diverse fleet, including smaller planes with low trip costs.

    Another advantage is its hub network that funnels passengers from all over Brazil through airports like Campinas near São Paulo. One example of its flexibility is a shift from high-frequency E-Jet service between Rio’s downtown airport and Campinas (catering to business travelers) to lower-frequency A320 service (catering to leisure and family-visit travelers, many of whom are connecting in Campinas to someplace else). During normal times, roughly 65% of Azul’s traffic is flying for business.

    Strategically, Azul last week implemented a new codeshare and loyalty partnership with Latam, something unthinkable from a regulatory point of view pre-crisis. It’s also selling some older E1 E-Jets to David Neeleman’s new U.S. startup, Breeze.

    “Crisis brings opportunities,” Azul insists, promising to emerge as a lower-cost and more efficient airline by 2022.

Cebu Pacific Frustrated by Government Restrictions

  • Cebu Pacific of the Philippines was a profitable airline before the crisis, and one that planned to expand more aggressively with new planes after several years of stagnation. But Covid-19 caused a rough Q2 loss, captured by a negative 442% operating margin. Revenues plummeted 94% y/y but operating costs declined only 59%. Cebu was essentially non-operational in the quarter, with ASK capacity down 99%. The only exception was cargo, which was ramped up in the quarter.

    Cebu expressed frustration with travel policies within the Philippines, which can vary greatly by local government. Some localities only permit Philippine residents to travel. Some have limits on even domestic flight frequencies. Required documentation varies. Cebu contrasts this with Indonesia, Thailand, Vietnam, and Malaysia, which all now at least permit domestic leisure travel. As a result, Cebu’s capacity will be just a tenth of normal next month. Forward bookings look terrible.

    The LCC is negotiating with Airbus for delivery deferrals of its A321 NEOs and A330 NEOs. It continues to add more cargo flights. And it’s using the downturn to devise new ways to increase efficiency in operations, maintenance, passenger services, payments, crew scheduling, and so on. The efforts, along with more incoming A321 NEOs, should reduce unit costs 21% from 2022 (when demand hopefully normalizes) to 2025.
  • After a profitable first quarter, Air Arabia suffered a $65m net loss in the second quarter. Q2 operating margin was negative 173%. The low-cost carrier is based in the Emirate of Sharjah, where it stations 37 planes. It has another nine flying for a joint venture it operates in Morocco. It has a four-plane joint venture in Egypt. And just last month, it launched its latest joint venture: Air Arabia Abu Dhabi in cooperation with Etihad.

    Across the group, Q2 revenues declined 90% y/y, having flown just 40k passengers. In the same quarter a year ago, it flew 2.3m passengers. Operating costs, meanwhile, fell 65%. Air Arabia runs a number of other businesses, offering maintenance, hotel rooms, training, tour packages, etc. That diversification normally offers a hedge against the ups and downs of air travel. Not now though. Everything travel- and aviation-related is suffering. Well, except cargo, which offers Air Arabia a bit of relief. It also made some money with charter flying, mostly for repatriation purposes. The airline, controlled by Sharjah’s government, feels conformable with its liquidity position. But more cost cutting is necessary.

    Unfortunately, it signed a contract to by 120 NEO jets from Airbus in November—if only it had waited until the market crashed. It’s now even questionable whether it needs all those planes, with travel demand likely depressed for the next few years. Then again, maybe traffic will revive faster than expected. It does help to be a low-cost shorthaul carrier. Dubai, for which Sharjah is a convenient gateway, reopened to tourists last month. Air Arabia is already flying NEO LRs, which enables longer routes like Sharjah-Kuala Lumpur. It will take a fifth LR before year end. In its 120-plane order last fall, included were 20 XLRs with even greater range.     
  • Back in Turkey, Pegasus is a quiet competitor to Turkish Airlines, less well known abroad but often more profitable. Last year, it was the world’s fourth-most profitable airline with a 19% operating margin. During summers, its margins can be stratospheric. So how is it dealing with the greatest industry crisis ever? It didn’t operate any scheduled flights during April and May, reviving domestic service only on June 1, and international service on June 13. Without any cargo to soften the blow, operating margin for the quarter was negative 356% on a mere $24m in revenue. Revenues and operating costs declined 95% and 75% y/y, respectively. Labor costs, more specifically, dropped 63% with help from unpaid leave schemes and government wage subsidies.

    Like its fellow LCCs Ryanair and Wizz Air, Pegasus will be fine once leisure traffic volumes return to something akin to normal. It doesn’t need high-yield traffic given its low-cost structure. The recovery will take time though, with the carrier’s domestic ASK capacity back to just three quarters of normal last month, and passenger volumes only 58% of normal. The July international figures are lower (22% of normal ASKs and 15% of normal traffic). Pegasus is still taking A320 and A321 NEOs this year, planning for a near all-NEO fleet by 2024, with CEOs and B737s on the way out.
  • Air Arabia’s LCC rival Jazeera Airways, based in Kuwait, posted a $13m Q2 net loss, with a negative 54% operating margin, according to financial statements published with the Kuwaiti stock exchange. Its balance sheet, meanwhile, showed a big increase in both its cash balances and liabilities, consistent with various fundraising efforts. Jazeera didn’t provide any commentary about Q2.

    But before the pandemic, it was starting to adopt a more ambitious growth strategy after many years of keeping its fleet and network small. A number of new NEOs entered service. It began serving more Indian subcontinent routes. And it even launched an A320 NEO flight from Kuwait to London Gatwick. It also operates its own terminal at Kuwait’s main airport. Another change in strategy was a decision to adopt a new pricing model and abandon business class seating on all but its London Cairo flights. It was supposed to add five new NEOs and five new routes this year.
  • Chorus, which operates much of Air Canada’s regional operation, managed a $20m net profit last quarter thanks to part of its revenue coming from fixed margin contracts with its partner that don’t vary with aircraft activity. But the net result excluding special items was negative, as was its operating margin (-11%). Canada’s extremely stringent travel restrictions meant Chorus could only operate about 5k flights last quarter, compared to 56k typically. It flew just 9% of it Q2, 2019 block hours. It was also forced to cut more than 65% of its workforce and raise new funds.

    Chorus complained no less loudly than Air Canada about Ottawa’s aviation and travel policies, citing the absence of financial aid and higher costs. Nav Canada, responsible for air traffic control, is actually increasing charges 30% next month, Chorus said. Air Canada, meanwhile, is closing regional airports and shuttering routes. 
  • U.S. regional airlines are certainly not immune to the Covid catastrophe. But their business model protects them from some of the short-term pain. Fortunately for them, the four U.S. airlines that outsource a major portion of their flying—United, American, Delta, and Alaska—have sturdy enough liquidity positions to pay their bills. According to a typical capacity purchase agreement between two carriers, the mainline partner provides a guaranteed monthly fee per aircraft under contract, plus a fixed fee for each block hour and flight actually flown. They’ll also cover the regional carrier’s direct operating expenses, i.e. for fuel.

    Mesa Air—which flies CRJ-900s for American and E175s and CRJ-700s for United—collected its fees and earned a $3m calendar Q2 net profit. But that included the payroll support it received from Washington. Assuming Mesa had paid for labor itself, the company’s actual net result would have been a $40m loss, accompanied by a negative 38% operating margin. The big issue was a heavy reduction in flying with American and United cancelling so many flights. Mesa’s block hours, a measure of capacity flown, declined 70% y/y, meaning woefully low utilization of aircraft, workers, and other resources.

    That said, flying should be up considerably this month and next, and Mesa won’t have to furlough any workers if current schedules more or less hold firm. After payroll support expires on Oct. 1, assuming no extension, the airline will however implement reduced hours and continue voluntary leave programs. Competing with the regional giant SkyWest isn’t easy. But Mesa’s low costs are an advantage, and one it intends to preserve.

    The radically altered pilot market will certainly help on the cost side—no more big hiring bonuses and frequent turnover. On the revenue side, Mesa is talking to American about a contract extension. More E175s are coming for United, though financing the new jets is a challenge. More unorthodox is a new contract to fly B737-400s for the cargo carrier DHL. This will among other things help keep pilots gainfully flying, keeping them around for what could one day be another regional pilot shortage. As for liquidity, Mesa intends to take advantage of Washington’s CARES Act loan program. 
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  • After Dubai began welcoming tourists again on July 7, Skift contributor and veteran road warrior Colin Nagy took the bait.

    He describes his Emirates flight from an eerily quiet New York JFK airport, where McDonald’s was the only cuisine on offer. Just to get on the flight, Nagy had to present proof of negative test results for Covid-19, taken within four days (96 hours) of takeoff. He purchased travel insurance beforehand, and even global evacuation insurance in the case of emergency. In addition, Emirates itself offers coverage for any medical- or quarantine-related costs associated with Covid-19. Onboard, passengers received hygiene kits with sanitizer and protective gloves. Flight attendants were outfitted with protective gear like face masks, goggles, and gloves.

    Nagy’s pre-flight Covid test absolved him from having to take another upon arrival in Dubai. People from selected high-risk cities had to take a test there and quarantine for 12-to-48 hours until getting the results. Nagy did opt to pay about $150 for a local doctor to come to his hotel and administer a test—results came back about nine hours later. The return trip too, went smoothly and safely.       
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Landing Strip

  • Last week, 78 fewer airlines were operating at Sydney airport compared to the same week a year earlier. The airport mentioned that and several other facts that capture the gravity of the Covid catastrophe for airports everywhere. Sydney airport handled just 400k passengers during all of Q2.

    On a brighter note, it said global airline capacity is now above the halfway point to recovery, based on scheduled seats for the first week of August. Seat counts, more precisely, were 50.4% of last year’s levels for the comparable week. It highlighted Vietnam, where domestic traffic in July was up y/y.

    Separately, Sydney airport is negotiating its relationship with a revived Virgin Australia. And it’s hoping to eventually see the opening of international travel bubbles, starting most likely with New Zealand and Pacific Islands like Fiji. Other early opening candidates are Hong Kong, Japan, South Korea, Singapore, and Canada’s province of British Colombia. That said, virus cases keep popping up in places that thought they had it under control.
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State of the Unions

  • American is urging employees to contact their Congressional representatives to extend the CARES Act payroll support program. Without the additional federal support, American had warned it may have to lay off tens of thousands of employees. “We and our union partners have not let up in our efforts to make the case for a PSP extension,” President Robert Isom and CEO Doug Parker said in a letter to employees.

    In the meantime, the carrier has extended the window for employees to take early retirement and voluntary separation packages. American separately warned that it could drop service to as many as 30 cities when the CARES Act mandates on air service expire on Oct. 1.
  • Singapore Airlines is extending its early retirement and voluntary separation packages to its cabin crew at both mainline and its soon to be phased out Silk Air subsidiary. Until now, cabin crew not working on flights had been offered pandemic response jobs throughout the city-state. Those employees are now being offered the early out packages. Thus far, 6k of Singapore 27k employees have taken early-out packages. The carrier is still operating just a fraction of its exclusively international network.
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Routes and Networks

  • Florida can be enticing, but sometimes disappointing. Ask the Spanish explorers who failed to find the Fountain of Youth, or many a real estate investor. Airlines know the feeling too, tempted to ramp up Florida flying this spring after early indications of a quick post-Covid demand recovery. Alas, the recovery soon stalled. But the allure remains.

    United, still thinking Florida leisure demand will lead the recovery this winter, announced a bevy of new flights. Twenty-eight new flights to be exact, all to Fort Lauderdale, Orlando, Tampa, and Fort Myers. The new service isn’t from United’s big hubs, however. They’re from non-hub airports like Boston, Cleveland, Indianapolis, Milwaukee, New York LGA, Pittsburgh, and Columbus. That’s LCC-like scheduling, which United thinks it can get away with under current conditions. Fuel is cheap, after all. Other costs, including labor, are down as well.

    And if there’s one market that doesn’t require hub feed, it’s Florida in the winter, always a fountain of nonstop demand from cold weather climes… when there are no pandemics and quarantines, anyway—we’ll see what the situation is after November and December, when United’s new flights begin. Some by the way, will only operate on peak days, again an LCC-like tactic. American and Delta too, might find the need to behave more like LCCs so long as shorthaul leisure traffic is all there is to chase.

Could Emirates Fly to Israel?

  • The UAE and Israel agreed to establish diplomatic ties last week, which raises the question: Will Emirates soon fly to Tel Aviv? If so, it would pose a major challenge to other airlines that connect Israel to the world, Turkish Airlines most importantly. Emirates, and Etihad for that matter, would be well placed to link Tel Aviv to North America, a large market contested by many U.S., Canadian, and European carriers, not to mention El Al, which itself might start flights to Dubai and/or Abu Dhabi.

    Besides Emirates and Etihad, the UAE’s Air Arabia, Air Arabia’s Abu Dhabi venture, Wizz Air Abu Dhabi, and FlyDubai could soon be eligible to serve the Tel Aviv market.
  • Meanwhile, Emirates is adding flights again in Pakistan. Its schedule now is up to 60 weekly flights, many timed to connect through Dubai to the U.S. Emirates now has five gateways to the U.S.: Houston, Boston, Washington Dulles, New York, Chicago, and Los Angeles.
  • International flights are beginning to trickle back. Miami International reports that three airlines have resumed service. Volaris resumed flights to Guadalajara, while Air Europa started flights to Madrid again. Swiss began flights to Zurich. Now, 13 airlines operate international flights from Miami.
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Covid Crisis 2020

  • S&P Global now expects air travel demand to be down 60-70% this year compared with last year. This is a downgrade from S&P’s previous forecast of demand this year being down 50-55%, compared with 2019. And demand in 2021 is expected  to drop 30-40% compared with 2019. S&P does not expect demand to recover until 2024, which tracks with IATA’s forecast. International demand, measured in RPKs, collapsed in April and May, and improved only slightly in June (to -87%, compared with 2019). Ever-shifting travel restrictions are to blame, S&P says, and corporate demand has all but evaporated, with no recovery in sight.

    Leisure demand is showing signs of life, as people take their summer vacations and visit friends and family. Domestic demand is faring better but still was down almost 70% in June. Throughput at Transportation Security Administration (TSA) checkpoints in the U.S. has been inching back up in the summer, fueled by domestic leisure travel. Although throughput has topped 700k daily passengers on several days recently, it’s still a fraction of what it was. Throughput on a typical August day last year topped 2.5m daily passengers.

    Government aid has helped airlines survive, S&P notes, in every region except Latin America, where governments have not opened their checkbooks. Airlines also have not shelled out as much in ticket refunds as had been expected. The industry also has been right-sizing itself for what it expects will be a much smaller near-term future.

    And how does that near-term future look to S&P? Compared with 2019 levels, demand is expected to be down 15-20% in 2022 and 10-15% in 2023. Recovery worldwide could be uneven, dictated by the pandemic and the availability of effective vaccines or therapeutics.

North America

  • JetBlue CEO Robin Hayes, speaking on Bloomberg Television, said he was hoping demand would be better this summer, especially after a springtime mini-revival. But demand regrettably plateaued at about 25% to 35% of normal summer demand. This month, JetBlue is flying about 40% of normal capacity, which is disappointing. In June, it was hoping to be flying at about 50% to 55% of normal by August. Hayes is confident that once Covid cases come down, and quarantines removed, leisure demand will recover. But right now, current levels of demand are simply too low to support all of its current staff.

    That said, JetBlue is still hoping to avoid furloughs, aided by the quarter of staff that accepted severance packages or long-term leave offers. It has others on short-term leave, ready to return when demand recovers. Right now, the number one focus is reducing cash burn.
  • Alaska Airlines told investors to expect Q3 capacity to be down 50% y/y, keeping in mind that Washington is forcing airlines to serve certain routes as a condition of their CARES Act aid. Alaska flew just 424k passengers in May, which rose to 887k in June and 1.1m in July. This month it expects to carry 1.2m to 1.3m. But that’s still down 70% y/y even in the better-case scenario. August revenues will be down a similar amount. Alaska did say it would burn less cash in August than in July thanks to improving ticket sales. That’s a modestly hopeful sign.
  • The U.S. Travel Association warns that without additional support, even more travel-industry workers could lose their jobs. Unemployment in the sector already tops 40% and will rise unless there is another round of fiscal stimulus from Congress. The group said there was some recovery in employment in May and June, but demand for the fall appears to be softening. The unemployment rate in the sector does not include the tens of thousands of airline employees who may be furloughed after Oct. 1, when the CARES Act payroll support program expires.


  • Europe’s TUI, a giant in the leisure travel space, sounded generally bullish about the recovery as popular holiday destinations reopen. In June, about 4k German travelers flew TUI to Spain, marking a small but welcome revival after two months of nothing. For the peak summer season as a whole, bookings are down more than 80% y/y but the planes that are flying are full—load factor during July was 89%, with something similar expected for August. Importantly, the company expects to be cash breakeven for calendar Q3. The fall/winter season is always much slower for TUI, but capacity will be back to about 60% of normal, with forward bookings currently consistent with that decline. In the coming months, new destinations will be back on offer, including Turkey, Egypt, and Tunisia.

    There’s strong bullishness about next summer, amid clear signals of pent-up demand from Europeans eager to get back to their travel routines when the crisis passes. This is especially true for shorthaul travel. Some of the 2021 bookings coming in, to be sure, are from customers redeeming vouchers they received when their trips were cancelled this spring. As management noted though, trip prices are up, so many people will wind up paying more than their vouchers are worth. There are concerns no doubt, about longhaul demand for next summer.

    Separately, TUI and Boeing have reached agreements on MAX compensation and future deferrals—TUI is a major customer of both MAXs and Dreamliners.

    Like its rivals Lufthansa and Condor, TUI is receiving generous aid from Germany’s government. As it happens, its TUIfly shorthaul operation in Germany wasn’t particularly strong even before the crisis, hence plans for labor concessions and a major fleet reduction. Its fleet will in fact shrink by 50%, bringing the group’s total shorthaul fleet to around 100 planes. Obviously, the recent spike in Covid cases across Europe is a development TUI is watching with some trepidation. 
  • Speaking of which, when the U.K. recently imposed a two-week quarantine on arrivals from Spain, without much notice, airlines and travelers scrambled to adjust. Well, this weekend, London did the same thing for travelers returning from France, Malta, and the Netherlands. EasyJet, for one, said it would maintain flights and offer affected customers vouchers or another flight with no change fee. The U.K.’s move was a response to growing Covid cases throughout Europe, complicating airline recovery efforts. The grim reality is that allowing international air travel and fighting the virus are not terribly compatible. Air travel, after all, was what spread the virus from China to Europe, and then from Europe to the U.S.        
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Feature Story

Airports are in for a bumpy ride, even if Congress approves more emergency funds

Last year, McCarran International Airport in Las Vegas had its busiest-ever year, handling more than 51m passengers. And this year, it was on track to beat that, with traffic in the first two months of 2020 up more than 6% compared with the same months in 2020. And then a virus began to spread. Traffic plunged, and by April, the airport saw only a little more than 150k passengers for the entire month, compared with more than 140k passenger per day in 2019. Passenger volumes have since rebounded as travel restrictions around the country have eased, and as travelers eager for summer vacations have flocked to leisure destinations. But the outlook for the fall isn’t encouraging.

Las Vegas is hardly unique. The contours of this story hold true for almost every airport in the U.S., as travel plunged, began to recover, and softened again, following the trajectory of the pandemic. The irony is that the months before the pandemic struck were boom times for airports. After all, the U.S. airline industry was the strongest and most profitable in the world for the better part of a decade.

Since consolidation, which coincided with the economic expansion after the 2008 financial crisis, traffic and capacity growth were steady if not spectacular. Airports did see hundreds of new aircraft serving hundreds of new routes, some launched by ambitious foreign carriers. Many airports and the communities they serve enjoyed first-time-ever nonstop links to lots of new cities. This emboldened airports to break ground on new terminal projects and other infrastructure programs. But now, much of that new air service is gone. And it might never come back. International routes, especially, are subject to much lower demand conditions for perhaps another three or four years. IATA for one expects international traffic to reach 2019 levels only in 2024. This leaves airports wondering what comes next.

In the short-term, it’s a waiting game. The CARES Act stimulus mandated that airlines continue operating to all the destinations they had served before the pandemic struck (although the Transportation Department has granted many exemptions). This will last until Oct. 1, when the CARES Act mandates expire. Airlines have signaled they will be much smaller in the fall, warning employees of impending furloughs and layoffs. Southwest CEO Gary Kelly, for one, said the carrier will be roughly 25% smaller in the fourth quarter. And American became the latest airline to signal its smaller future when news broke last week that it could axe service to as many as 30 cities after Oct. 1.

This, of course, means less money for airports, which derive much of their aeronautical revenue from landing fees, terminal rents, and other charges. Federal funding comes in the form of Passenger Facility Charges (PFC) levied on passengers, now capped at $4.50 per segment. Federal Airport Improvement Program (AIP) grants are earmarked for projects that improve safety or reduce noise. Other, non-aeronautical revenue streams, including from parking, rental cars, and airport concessions, have dried up as well, as passenger traffic has plummeted. U.S. airports are expected to suffer a $23b shortfall in revenues this year, according to Airports Council International-North America (ACI-NA).

The CARES Act went some way toward alleviating this by providing $10b in relief. ACI-NA and other airport groups had lobbied for another $13b to cover the estimated shortfall. One of the bills under consideration in Congress had an additional $10b for airports but talks between the administration and Congress fell apart earlier this month, and both houses of Congress have adjourned for a summer recess. Whether the issue resurfaces in negotiations in September remains to be seen.

In the meantime, airports will need funding to maintain operations and to service their debt. Most airports around the country raise funds for projects through municipal or other bonds. The payment on these bonds is due twice a year, and without cash flow from PFCs, rental cars, parking, and concessions, airports could be at risk of defaulting, says Kevin Burke, ACI-NA president. The group has long advocated raising the PFC but has faced fierce resistance from airlines, which say higher PFCs will depress travel demand.

Unlike in almost every other country in the world, airports in the U.S. are governed in a patchwork of varying structures: Some owned and operated by cities and counties, some by airport authorities. But all are publicly owned and operated and funded by the federal government. Governance structures may vary, but airports hew to an iron-clad rule, that all revenues generated on the airport stay in the airport (and can’t be diverted to fill potholes or whatever other needs a city may have). And the converse also is true — airports don’t benefit from local tax money.

Airports can cut costs — to a degree. They can close concourses and restrooms and turn off escalators and elevators, among other things. But they must remain open, and for that they need to maintain staffing, at least to a minimum to maintain safety and, now, public health. Airports, like airlines, are mandated by the CARES Act to maintain staffing, but many have offered voluntary separation and retirement packages and leaves of absence. Some also are reducing hours for all employees, when feasible and when it will not affect airfield safety. “We are trying to take as many costs out of the system as we can,” says Christina Cassotis, CEO of the Allegheny County Airport Authority, which runs Pittsburgh International Airport.

Other cost-cutting levers include stopping work on capital improvement projects when those projects don’t affect airfield safety or are not so far along that it makes little sense to halt them. San Francisco International Airport, for one, delayed the start of a $1b new terminal expansion project. The Port Authority of New York and New Jersey may delay the $15b New York JFK terminal improvement projected unveiled by Gov. Andrew Cuomo in 2018. Miami has paused a major terminal project until traffic begins to return. This pattern is repeating itself around the country, at large and small airports.

But will passengers return? Of course, but not at the same level as in 2019 for years, if current forecasts hold. Even with effective therapeutics or vaccines for Covid-19, it could take until the end of 2021 for life in the U.S. to return to normal. Until then, airports at risk of losing air service are working with airlines to maintain operations. Philadelphia, for example, is among the airports that have rolled out incentive programs that include reduced or waived landing fees to attract service. Las Vegas, to cite another example, is keeping airline rates and charges stabilized at least through the end of the year. “We want to remain competitive when special events come back, when conventions come back,” said Clark County (Nev.) Director of Aviation Rosemary Vassiliadis. “Leisure travel has carried us, and if our costs spike, we’d lose that discretionary traveler.”

For the most part, traffic will return, eventually, to large- and medium-sized hub airports or those in metropolitan areas. But the return may not be equal. In cities with multiple airports, airlines could consolidate at the largest one, as JetBlue is doing in the Los Angeles Basin, ending most of its operations at Long Beach. Airports in Nashville or Boston or Minneapolis, to cite a few examples, will recover, because there are few alternatives to getting to those cities. And large hubs in which airlines have invested heavily and are critical to their networks — think Atlanta, or Charlotte, or San Francisco — also will see traffic and demand start to return.

But what about smaller cities or airports? That story could be determined by what happens with regional airlines. Given that most small airports are served by regional carriers (with the exception of service by carriers such as Allegiant or Sun Country in some markets), the current shrinking of the regional industry is worrying. The 2008 financial downturn is instructive, when smaller markets saw air service slashed. Capacity didn’t start returning to smaller markets until the middle of the last decade. Non-hub airports rely on the network carriers for connectivity, and the network carriers for the most part are cutting their regional flights and concentrating on their larger markets. “I don’t think all the airports that had commercial service on March 10, 2020 will have commercial air service on March 10, 2022,” says William Swelbar, research engineer at the Massachusetts Institute of Technology’s International Center for Air Transportation.

If current trends hold, then, it’s likely we’ll see a tale of two airport recoveries. One, the happier tale of hubs and large-market airports recovering as traffic returns. And another, the less-happy tale of small communities that will lose all air service. And that could become a vicious cycle, as federal grants are allocated by enplanements and non-aeronautical revenues dry up.

Even with another federal stimulus, it’s hard not to imagine this scenario. After all, the original stimulus was meant to bridge the gaps between the two legs of a “V-shaped” recovery, or the space between a sharp downturn and a sharp uptick. It is becoming increasingly apparent that the recovery will be some other shape, possibly “W-” (downturn, uptick, downturn, uptick), “U-” (sharp downturn, prolonged recession, followed by a recovery), or in the worst-case, “L-shaped,” (sharp downturn, followed by a long recession or depression). In any of those other cases, federal money will again run out, and whether there is political will next year to provide additional funds to tide airports over is a big question mark, especially as Congress hasn’t even decided if it can cough up another $10b for airports now.

And so for most airports now, airport belt tightening is the order of the day. 

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Around the World

A look at the world’s airlines, including end-of-week equity prices

Around the World: August 17, 2020

Airline NameChange From Last WeekChange From Last YearComments
American2%-49%Extends fee waiver policy for any ticket changes; carriers suspending fees to encourage people to book
Delta7%-49%New York Times article looks at Delta’s less-than-happy experience owning an oil refinery
United5%-56%Southwest, a major rival in Denver, opening new Steamboat Spring, Colo. route in Dec.; LCC will also serve it from Dallas Love
Southwest5%-28%Barring a miracle, 2020 will mark the end of its 47-year profit streak, CEO Gary Kelly said at Texas Tribune event
Alaska3%-36%With middle seats still blocked, new buy-one-seat-get-one-free offer gives customers chance to reserve whole row for themselves
JetBlue7%-37%CEO says again, on Bloomberg Television, that London is coming around Q3 next year; no announcement yet on which airport
Hawaiian3%-45%Borrowing money via trust certificates with A330s and A321 NEOs as collateral
Spirit3%-53%Aug. schedules show Panama City, Fla., with the most new seats y/y among U.S. airports; LAX lost the most (Cirium)
Frontier(not publicly traded)Bloomberg reports Airbus determination to stay on track with A321 XLR development; Frontier among the buyers
Allegiant0%-17%ASM capacity was down only 10% y/y in July, but pax volumes down 49%; load factor was just 51%
SkyWest7%-42%Rival Mesa estimates that half of its costs are fixed, the other half variable
Air Canada7%-60%Unveils details of revamped Aeroplan program; remains a key lever of future earnings growth
WestJet(not publicly traded)Will there be the usual migration of Canadians south this winter? Depends on virus
Aeromexico16%-61%Announces deal to obtain DIP financing to get it through bankruptcy; awaits court approval
Volaris7%-12%Rival VivaAerobus received its first A321 NEO on June 30; ended Q2 with 38 planes
LATAM1%-78%Chilean LCC Sky Airline applying for rights to fly NEOs nonstop to South Florida from Peru’s capital Lima
Gol4%-49%Owes $300m to former partner Delta next month, as Reuters reports; could bankrupt carrier if no delay is negotiated
Azul7%-56%Cargo revenues in July rose almost 50% y/y; happy it invested in the cargo business pre-crisis
Copa8%-51%Ended Q2 with 102 planes, including the 14 B737-700s and 14 E190s it’s selling; has six MAX 9s
Avianca0%-87%CEO of Indigo-backed Jetsmart tells Reuters he’s eager to expand within Peru, maybe within Colombia and Brazil as well
Emirates(not publicly traded)Playing active role in providing critical supplies to beleaguered Beirut
Qatar(not publicly traded)Will resume daily flights to London Gatwick this week using B787s
Etihad(not publicly traded)Cut its employee wages by between 25% and 50%
Air Arabia1%-5%Saudi LCC Flynas joined IATA in February; will help it generate more interline traffic among other benefits
Turkish Airlines4%-8%Not concerned about losing airport slots; says it’s bringing back capacity faster than rivals
Kenya Airways0%36%In Nigeria, startup Green Africa hires former SpiceJet CFO to manage its finances; has 50 A220-300s on order
South Africa Air.(not publicly traded)Hires advisers to help it find a strategic investor, not an easy task
Ethiopian Airlines(not publicly traded)South Africa’s Business Day profiles Ethiopian and its success with cargo; incurring heavy losses on pax side though
IndiGo21%-29%Hoping to raise additional funds via share offering and more sale-leaseback deals
Air India(not publicly traded)Lots of discussion about the Tata Group agreeing to buy Air India before the end of this year
SpiceJet7%-65%Rival Go Air loses its CEO as Vinay Dube, who previously ran Jet Airways, resigns
Lufthansa9%-37%Flight attendants vote yes to concession deal; talks with ground workers by contrast not going well
Air France/KLM-1%-62%Members of Air France’s main pilot union (SNPL) overwhelmingly approve Transavia’s domestic expansion
BA/Iberia (IAG)5%-54%Air Europa looking for pilot concessions to avoid bankruptcy amid IAG takeover uncertainty (Expansion)
SAS-2%-40%Icelandair announces completion of deals with all creditors, as well as with Boeing over MAX compensation
Alitalia(not publicly traded)Considering the adoption of B787s, A320 NEOs, A220s as it plans for its post-pandemic revival (Corriere della Sera)
Finnair-4%-93%Cutting back flight frequencies in response to increase in virus cases across Europe; notes popularity of Lapland and Kuusamo in Finland
Virgin Atlantic(not publicly traded)U.K. economy shows severe decline for Q2, even more so than the rest of Europe
easyJet-1%-37%Successfully executed previously announced sale-leaseback deals on 23 planes
Ryanair2%32%TUI mentions most Brits with reservations to Spain (now subject to quarantine) are switching to Greece, etc. rather than cancelling
Norwegian-21%-96%Still hasn’t announced Q2 financial results; scheduled to report Aug. 28
Wizz Air5%7%Announces new base at Doncaster, which will be its second U.K. base after London Luton
Aegean-3%-53%Greece experiencing significant jump in Covid cases; importing the virus via tourists
Aeroflot5%-23%In July, Pobeda, its LCC, carried even more passengers than its parent
S7(not publicly traded)Russia becomes first country to proceed with mass Covid vaccinations, but int’l health officials question how well it was tested
Japan Airlines6%-40%AirAsia Japan resumed service (which was minimal even before the crisis) on Aug. 1
All Nippon4%-33%Nikkei reports on ANA’s discussions with banks about borrowing new funds
Korean Air2%-15%Stock price down y/y but by only 15% thanks to cargo-led profits
Cathay Pacific1%-44%HK Express, its low-cost arm, recorded a $101m net loss during H1; grounded all 21 planes in mid-March
Air China6%-20%China’s post-Covid economic recovery largely driven by supply side not demand side; production up, consumption down
China Eastern6%-6%Opened seven new domestic routes last month, including one from Covid’s origin city, Wuhan
China Southern5%-14%For Taiwan’s EVA Air, local currency typically accounts for 40% of revenue, US$ another 30% or so; yen, yuan, euro also important
Singapore Airlines9%-58%Singapore-Malaysia Reciprocal Green Lane (RGL) limited to just 400 biz travelers per week
Malaysia Airlines(not publicly traded)Malaysia-Singapore flights, in accordance with RGL, set to recommence this week (Aug 17)
AirAsia3%-64%Expects to be flying 65% to 70% of its pre-crisis domestic capacity in Malaysia by Q4; 75% to 95% for domestic Thailand
Thai Airways10%-58%Thai AirAsia now flying from Bangkok’s main airport (Suvarnabhumi) in addition to its longtime base at Bangkok Don Mueang
VietJet0%-24%Vietnam still considering support package for its airlines; could include tax cuts, airport fee reductions, etc.
Cebu Pacific7%-56%Getting a second all-cargo configured ATR 72 in October
Qantas11%-37%Fiji Airways, of which Qantas owns 46%, has its own restructuring to undertake
Virgin Australia0%-46%Regional carrier REX, looking to fly narrowbodies, eyeing Virgin B737s (AFR)
Air New Zealand-2%-53%N.Z. taking care as small cluster of new Covid cases emerges; was for a time Covid free
Brent Crude Oil2%-23%US EIA, on its website, discusses inverse correlation between oil prices and value of U.S. dollar

Some stocks traded on multiple exchanges; not intended for trading purposes.

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