Issue No. 786

Will Spirit Recover Faster Than its Rivals?

Pushing Back: Inside This Issue

The fourth quarter is now underway, with the Covid crisis showing few signs of easing. There is, to be sure, some positive momentum in a few domestic markets. Russia is leading the way with y/y demand growth. China’s not quite there yet but on its way. Momentum is building in New Zealand, South Korea, and Vietnam. Even in these countries though, airlines are suffering mightily from the absence of international demand and a depressed fare environment at home.

Elsewhere, the bleakness is unmistakable. IATA once again downgraded its global demand forecast after traffic growth — however modest — stalled in mid-August, just as most carriers were entering their quiet autumn season. Several U.S. airlines began mass layoffs after failing to secure an extension of federal payroll support. In Europe, Greece’s Aegean spoke despairingly about a tough winter ahead as a second wave of Covid cases flare throughout the continent. Not even Aegean’s shorthaul leisure orientation provided much help.

The Covid scourge has even reached the White House, and just before a momentous election no less. Spain is the top hotspot in Europe. Infection rates in India, Russia, and South America remain troubling as well. Treatments are improving, but nowhere near enough to arrest the mass death and suffering taking place across the globe. It will likely be another six months at least before widespread vaccinations.

Is there anything airlines can do to facilitate more travel in the meantime? Increasingly, the industry is pinning its hopes on testing passengers for the virus prior to departure. The idea is gaining steam as testing technology improves. But there are, make no mistake, logistical and cost challenges to address.   

Verbulence

“At some point early on in the summer, there was some expectation that possibly late Q3 or Q4 would see a more substantial recovery. It’s now the case that because of the resurgence of the pandemic as of early August… people around our industry are now realizing that the winter is going to be very hard and [the] return to normality or relative normality will take a longer period of time than what had been initially anticipated.”

Aegean Chairman Eftichios Vassilakis

Earnings

April-June 2020 (3 Months)

  • Aegean: -$82m/-$49m*; -129%

January-June 2020 (6 Months)

  • TAP Air Portugal: -$439/-$189m*; -27%

April 2019-March 2020 (12 Months)

  • Qatar Airways: -$1.9b; -12%

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

Airline Weekly Lounge Live

Join PaxEx.Aero founder Seth Miller and Airline Weekly Editor Machu Unnikrishnan on our livestream at 12 p.m. EDT, Monday, October 5. What is the passenger experience like during a pandemic? Is this even an issue airlines should be focused on right now? Watch a recording now.

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Feature Story

It says it can return to profitability faster than other carriers? Is Spirit Airlines right?

Around the World

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