Crisis Management at KLM

Pushing Back: Inside This Issue

Nobody’s flying. But somebody’s buying planes. Lots of them.

It’s the worst crisis ever for airlines, with demand a fraction of what it normally would be. But Ryanair nevertheless pulled the trigger on another big Boeing order. It’s buying 75 MAX jets just as the plane prepares to reenter service after a long safety review. The MAX, Ryanair says, will be a game changer in terms of its operating economics. And by buying in a buyer’s market, it locks in a competitive price advantage, yet another in its impressive toolbox. There’s a reason — many reasons, in fact — why Ryanair is consistently among the world’s most profitable airlines. Remember: It even earned a small operating profit this summer!    

Lufthansa can’t say that. But it did say that demand is picking up strongly on parts of its network. People are booking flights to southern Africa and to the Canary Islands, for example. More Europeans are planning Christmas on the Mediterranean, or in the snow-filled regions of the upper Nordics. The Nordic carrier Norwegian, though, is simply trying to survive another day, unveiling yet another attempt to restructure its balance sheet. SAS, with a more comfortable cash position thanks top more supportive government policies, wonders how long its rival will be around.  

As the summer sun arrives Down Under, Australia’s Qantas is encouraged by a domestic demand reawakening. That’s no small development considering how profitable the Australian domestic market has been for the carrier. It faces tough battles though, with a revitalized Virgin and a Rex with tyrannosaurus ambitions.

U.S. carriers, unlike Lufthansa, are watching their bookings weaken as the Covid menace overloads the American health care system. Russia, too, has a rising rate of infections and deaths. And sure enough, that’s slowing what had been a remarkably busy summer for airlines flying domestically. Aeroflot, and especially its low-cost carrier Pobeda, certainty benefitted. But like pretty much every other airline in the world, it’s still having an awful year, hoping and praying that 2021 marks a road to recovery.

Verbulence

“We have seen a vast improvement in trading conditions over the past month as many more people are finally able to travel domestically again.”

Qantas CEO Alan Joyce

Earnings

July-September 2020 (3 Months)

• Aeroflot: -$287m/-$299m*; -17%

August-October 2020 (3 Months)

• SAS: -$293m/-$256m*; -83%

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