The airline bloodbath has begun

As a result of the current pandemic, the worldwide airline industry is facing a crisis like never before. It's going to make the post 9/11 suggestion look like a hiccup. As of today, the following cuts have been announced-

Delta has cut 40% of their flights, including all European routes, and will park 300+ aircraft.
American has cut 34%, and will accelerate retirement of their remaining 767s and their entire 757 fleet.
United has cut 10% domestically, and will cut an initial 20% internationally by May, with rolling cuts possible into next year.
JetBlue has cut 5%.
Qantas has cut almost almost 25% of flights, their CEO has suspended his salary, and the Board of Directors will take a 30% cut. They'll ask employees to take paid and unpaid vacation as planes are grounded. Jetstar will cut flights as well.
Norwegian is cutting 4,000 flights and potentially laying off half their staff.

I won't be surprised if at least one major airline doesn't survive the current crisis. They're already getting hammered and this is just getting started. It was initially estimated that losses would hit $113B before all was said and done. That number is now expected to go higher.

www.axios.com...

www.cnn.com...

nypost.com...

www.cnn.com...

I was on three flights this week, all normally are oversold, these went out half full.

I have 5 more next week and the seat maps are about 1/4 full.

So, I don't know I find it a bit odd that an entire industry is run on what appears to be hardly any profits or basically just getting by. Every single time there is any interruption in travel they need some sort of bail out or some companies just fold etc...Certainly I am missing something here, would appreciate if someone could clear that up for me.

thanks

a reply to: Habs2133

This isn't an interruption in travel, this is a cessation of travel.

a reply to: AugustusMasonicus

They're starting to suspend slot rules. The existing rules require them to operate 80% or more of flights that they have slots for at every airport they operate from, or they risk losing them. That was requiring them to operate empty flights just to meet the 80%.

a reply to: AugustusMasonicus

My kid is flying to Florida for spring break in 10 days.....
Maybe..

a reply to: Habs2133

The airline industry always operates on razor thin margins. Before they retired the MD-80 series, American could operate an MD-88 out of Dallas, running over 85% full and make single digit profit on that particular flight. The IATA reported that 2019 profits, worldwide dropped to $25.9B. That sounds like a lot, until you realize that's spread out over 290 airlines that the IATA represents.

In the first quarter of 2019, US airlines reported $2.1B in after tax profit. That includes every airline that operates a single aircraft over 60 seats, and a passenger and cargo weight over 18,000 pounds. So that's a lot of airlines to spread it around.

The effects of this are going to ripple throughout the economy. I think it will be worse than 2008...

a reply to: Edumakated

Once it hits the trucking industry, which is already getting hammered financially from other factors, the ripple effect from the two is going to be horrific to watch.

a reply to: Zaphod58

Considering that a Dreamliner cost $250 million, that $2 billion profit feels pathetic..

a reply to: Bluntone22

There's usually some discount in the order, but considering airlines don't usually order one at a time, yeah, those numbers drop fast.

originally posted by: Habs2133
So, I don't know I find it a bit odd that an entire industry is run on what appears to be hardly any profits or basically just getting by. Every single time there is any interruption in travel they need some sort of bail out or some companies just fold etc...Certainly I am missing something here, would appreciate if someone could clear that up for me.

thanks

You're not missing anything. You're calling it right. It's a very complicated and highly regulated industry. I work in it and moving passengers and cargo is an amazing feat.

a reply to: Zaphod58

I drove interstate for 3 years of my 6 driving years back in the mid 80's. "Just In Time Freight". " JIT ". Therein lies the problem from manufacturer to merchant.

a reply to: CharlesT

Sooner or later they're going to have to move a big chunk of drivers to other freight, such as food and medicine. We run loads for a company that's basically FedEx, but for businesses. We've run them exclusively for close to two years, and could count the number of canceled loads on one hand. In the last month, we've had somewhere around 10 loads cancel.

Now we get to see a little preview of the green new deal.

a reply to: Habs2133

Delta is probably among the healthiest in the world last year. Cleared $47B in revenue. EBITDA was $9.2B, but they netted only $4.7B in profit.

Taxes and debt holdings (loans for fleet acquisition, infrastructure costs, etc) ate half of the "profit" .

If revenues drop for any amount of time, and they are forced to borrow to maintain liquidity for operations short-term, then it quickly spirals to red.

And since the market is finicky, and airlines need periodic recapitalization, gas prices occasionally spike, etc, Many carriers are only hoping to bank enough scratch for the next rainy day. Some are just hoping to stay afloat through the red.

So maybe the healthiest carrier in the world right now posted 11% ROI last year. It's a rough business.

Sorry to hear this. The most vulnerable I worry about are the workers who are afraid to go to work and those like here that will be laid off.

I hope Trump and the Congress will have some kind of relief for them and others, through no fault of their own, will be devastated by this.

originally posted by: AugustusMasonicus

I was on three flights this week, all normally are oversold, these went out half full.

I have 5 more next week and the seat maps are about 1/4 full.

Patient zero at ATS . 😷

I expect multiple mergers after this...

Now will this benefit us... probably not but I hope.

originally posted by: Habs2133
So, I don't know I find it a bit odd that an entire industry is run on what appears to be hardly any profits or basically just getting by. Every single time there is any interruption in travel they need some sort of bail out or some companies just fold etc...Certainly I am missing something here, would appreciate if someone could clear that up for me.

thanks

maybe these companies need to stop with $5 million bonuses yearly