Issue No. 795

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.


“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


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

Weekly Skies

Russia’s airline industry was never known for its dynamism. But lo and behold, it’s become the fastest market to recover from the Covid crisis, with domestic passenger counts rising 6% y/y in August. Not even China’s domestic market has recovered…


An ominous sign for U.S. airlines? The Wall Street Journal looks at airline-branded credit cards, which have for years brought riches to airlines and credit card issuers alike. Think of all the money Delta has made selling miles to American…


For all of Ryanair’s many competitive advantages, few are as powerful as the favorable prices it pays for its airplanes. Why does it pay less than most of its rivals? The answer lies partly with timing, as it demonstrated again…


Sabre, in an investor presentation last week, noted the following: In 44 of the past 50 years, the number of global airline passengers increased from the year prior. And in those six years where traffic did decline, it never declined…

State of the Unions

Southwest has famously not laid off or involuntarily furloughed a single worker in its almost 50 years of operation. That may change. The carrier told more than 6,800 employees that furloughs could begin in March if industry conditions don't change…

Covid Crisis 2020

In an update for investors, American said current demand and future bookings have weakened after a strong start to Q4. A slowdown that began around Thanksgiving, it said, has persisted into early December. This unfortunately means cash burn for the…

Feature Story

Running an airline is not for the faint of heart. And running an airline during a once-in-a-century global pandemic takes even more fortitude. As domestic markets around the world start to recover, how does KLM manage with a domestic network…

Around the World

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