Issue No. 788

Virus-Era Volaris

Pushing Back: Inside This Issue

For United CEO Scott Kirby, channeling Winston Churchill, it’s 1942. The war underway is still a long way from over. Battles still are being lost. But positive momentum is building. And a vision for post-war revival is starting to take shape.

United, like Delta, lost gobs of money during the third quarter. But both carriers are witnessing steady if slow demand improvement as Americans grow more comfortable flying during the pandemic. This is true even as infection rates spike again. Airlines hope that industry-wide testing for Covid will further ease the public’s anxieties, allowing for additional demand momentum before vaccines open the door to a more comprehensive recovery. That will be the industry’s 1945.

The virus won’t unconditionally surrender. But if all goes well with vaccine development and distribution, it will stop posing a threat to mass air travel sometime in the second half of 2021. Thereafter, United expects a favorable competitive landscape abroad as wounded foreign rivals slash capacity. Undeterred by short-term cash concerns thanks to widely available capital throughout the crisis, United, Delta, and other U.S. airlines can now start shifting their focus to post-crisis strategizing. United itself is resuming investment in new premium cabins. Delta remains committed to its Latam joint venture. Southwest is adding new routes. Allegiant might acquire new planes.   

On the other side of the world, most of China’s major airlines reached an important milestone, carrying more domestic traffic this September than they did last September. But hold the celebrations. With ticket yields extremely weak and international traffic nearly nonexistent, carriers continue to lose large sums of money.

In other news, Virgin Australia will get a new CEO who’s controversial with some unions. The CEOs of Air Canada and British Airways are leaving — one voluntarily and the other, well, not so voluntarily. Air Canada is proceeding with its Transat takeover but paying a lot less. Malaysia Airlines wants to pay its suppliers and creditors a lot less, threatening dissolution if they don’t. No dissolution at Ryanair, just more capacity cutting amid boiling quarantine frustrations.

This week, the earnings show goes on, headlined by U.S. giants American and Southwest. Expect a market update from Qantas as well.

Verbulence

“The light at the end of the tunnel is now visible.”

United CEO Scott Kirby

Earnings

July-September 2020 (3 Months)

  • Delta: -$5.4b/-$2.1b*; -89%
  • United: -$1.8b/-$2.4b*; -108%

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

We Want to Hear From You

We at Airline Weekly want to know more about our readers. Please take a few minutes to complete this quick survey to help us better serve you. If you have any questions, feel free to send me a note at mu@skift.com.

Weekly Skies

There’s no pretending that Delta’s third quarter was anything but cataclysmic. From July to September, typically the best quarter of the year for U.S. airlines, Delta spilled $5.4b in red ink. All right, so this was only $2.1b when stripping…

Media

As China’s domestic airline industry recovers, the LCC Spring Airlines is not just restoring capacity. It’s growing capacity. A lot. As Shanghai Daily reveals, Spring is now one of the world’s fastest growing airlines, with ASK capacity this month up…

Fleet

Allegiant, speaking last week at the Boyd Group's International Aviation Forecast Summit in Cincinnati, is seeing more strength in demand recently, Bloomberg reported. The LCC, which has barely cut any capacity throughout the pandemic, is also getting inundated with calls…

Distribution

Business Travel News (BTN) published its latest ranking of the 100 largest U.S. corporate travel buyers, who collectively spent almost $12b on U.S.-originating trips last year. That was a record. At the top of the list was Deloitte, one of…

Routes and Networks

Chicago and Houston are two of Southwest’s largest and most important markets. Chicago Midway, in fact, was its single busiest airport by seats last year, according to Cirium. Houston Hobby airport ranked number seven. But Southwest does not serve either…

Covid Crisis 2020

Air Canada still wants Transat. But it won’t pay nearly as much for it. In May of last year, Canada’s largest airline announced the takeover of its rival for 13 Canadian dollars per share. Months later, it raised its offer…

Feature Story

It’s good to be lucky. It’s better to be good. It’s best to be both.

Around the World

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