Covid19, the airline industry. Where do we go from here?

This article sums the situation up.

originally posted by: Zaphod58
a reply to: Alien Abduct

Currently, in addition to the few passenger flights operating, American and United are operating special cargo only flights using 777 and 787s. American has 4 a week to Germany and back from Dallas. United is planning 40 charter flights pulling cargo.

Just about everyone is looking at parking 2/3rds of their fleet minimum. Lufthansa has already parked somewhere around 700 of 763. Delta plans to park 600 of 910, unless they end up shutting down domestic passenger routes entirely.

Do you think either United, Delta or American will go bust?

a reply to: Alien Abduct

Not with a bailout coming. But they're going to look a lot different afterwards. American is accelerating retirement of their last 767s to May, and 757s to next year at the latest. Delta is getting rid of their MD-88s at least, and has already said they're coming out the other side much smaller. The industry as a hole is going through some pretty radical changes because of this.

a reply to: Zaphod58

Would you hold a large amount of stock in any of these?

a reply to: Alien Abduct

I'd be torn honestly. If I knew this was short term, or knew I could hold onto them long enough, then I'd definitely give it serious thought. This is not going to be a quick recovery though. Unlike previous hits, this is going to be a matter of years just to get back to 9/11 levels I suspect. The IATA described it as a U shaped recovery, not the V shape after the H1N1 hit.

a reply to: thebozeian

I got a few pics going by Marana the other day. Lots of Delta jets stuffed in there. A few unexpected others as well. I suspect Goodyear will fill up too before long.

a reply to: Zaphod58
I was stood down last night for a month and I'm ok with it. Unusually but fittingly we were assigned a 747 with a double engine change. My first day in the industry was a 747 and I felt a little privileged to be there. It will almost without doubt be the last time I ever work a Jumbo and almost certainly the last time I both do a 747 engine change and a CF-6-80C2. So it was a bitter sweet and ignominious discovery today that overnight QF management made the decision to sell the remaining 5 on the books, most likely for scrapping. Such a decision in the 49th year of continuous 747 operations and months away from the 100th anniversary of a company whose existence is intertwined with the 747 story is a sad way to end what should have been a graceful bow. I'm an Airbus man now, but I cut my teeth on the 747 and nothing will change that. I took a panoramic photo of a very crowded but also very quiet jet base near sunset, and 4 of the 5 remaining 744ER's were in frame. Australia is going into lock down now, so it was fitting that the last flight into Australia which was from Santiago was also the last revenue flight for the 747.

Farewell big 747, I fear we shall not see your kind again.

I've been quietly following this thread, and the 'bloodbath' thread for a while now. Mainly because I've been at a loss for words.

After 32 years in the aviation business, what I see each day now is worse than the day before. I just sat here for probably 45 minutes staring at a flashing cursor, trying to find the words to write. I will try to find them here...

On the morning of September 11, 2001 I witnessed things I never thought I would see in the industry. By day's end I was convinced I had seen the apocalypse when it came to aviation. I was an engineer stationed at DTW at the time, and there were aircraft everywhere. Every square inch of runway, taxiway and apron packed with aircraft. There were more tails than you could count. There were even aircraft which had been towed off into the infield grass areas to make room. In the days which followed we would witness a wholesale paradigm shift in the industry.

This is worse.

For those who think the impact of the COVID-19 pandemic is just some temporary thing for the industry I can only say you would be sorely mistaken. I understand that most people don't really understand how complex the industry is, and how much different it is than running a normal business. Even trying to explain the complexities of the industry to an interested person is exhausting (for them).

This is worse.

The airline industry rebounded from 9-11 almost instantly, comparatively speaking. This time around it's not going to be that easy. Sept. 11, 2001 was a tragedy beyond imagination to be sure, but it was one day, and it was (4) aircraft and three states. And even more sobering, 9-11 was only one country. Sure, the repercussions lasted a lot longer than one day, but the event itself was only one day.

One day and one country.

The impact of COVID-19 is far greater than one day...and it affects the entire globe, not just one country. It's every single airline, every single aircraft and every country around the planet. I don't think many people fully comprehend this. Many see this event like just another 'event', a storm, after which the sun will come out. It's not going to be like that, not this time.

I've long said the airline industry, certainly here in the USA, has too much capacity. But this isn't the way to trim that capacity! This is pure carnage, and it's going to leave a lasting mark, possibly for decades or longer. The airline industry which emerges from this crisis will look dramatically different than the industry which went in. And what the traveling public thinks of as 'business as usual' will be anything but "usual" in the future.

As I walked through DEN mid-last week I saw things I never thought I would see. I saw empty concourses (not 'sort-of' empty, but EMPTY!). I saw food courts with not a single person in line. I saw trains with no people on them, trains which are usually packed like sardines. I saw baggage claims without a single soul in them. I saw empty parking garages, just completely devoid of cars. Even following 9-11 I didn't see those things.

No, this is worse.

a reply to: thebozeian

I just saw that all five are already sold, and will head to the US for storage, at least temporarily before whatever they're going to have done is done. It's a sad day for the 747, and the end of an era.

a reply to: Flyingclaydisk

I understand the industry, and thought I knew how bad this was going to get, but every day it gets so much worse, and it's happening so fast. One day, there were over 100,000 total flights being tracked, the next they were at 80,000 and falling so fast it wasn't funny. On March 28th, they tracked 69,510 flights. That was down 20,000 from the day before, and almost 120,000 from normal. On an interesting note, just about every day sees a new record for longest flight ever. Today it's Vienna to Sydney.

We're going to see a radically different industry come out of this, and I don't think anyone knows what it's going to look like.

a reply to: Zaphod58

We're going to see a radically different industry come out of this, and I don't think anyone knows what it's going to look like.

I can probably give you some glimpses...

- Significantly reduced capacity

- Reduced load factors. Probably down in the low 80's, maybe even the high 70's.

- Significant destination cuts by the majors.

- Feeder (commuter) fares will SOAR! It won't be uncommon to see commuter fares exceed those of the majors.

- Drastic reductions in non-stop flights.

- Much higher airfares. 200-300%+ is not out of the realm of possibilities. The day of the $69 airfare has gone the way of the Dodo bird.

- Death of all the frequent flyer programs with no compensation (that money is GONE!)

- Might see the cessation of bag fees. (They'll be built into ticket pricing)

- Higher landing fees, and likely much higher RON fees

- Higher PFC's, but at the same time significant reduction or outright cancellation of major CIP programs.

The industry will likely look a whole lot like it did in back in the 70's during the regulation days (but without the regulation). There will be regulation, but it will look different.

Air travel will return to being something few can afford (call it a 'luxury' if you wish). And on an interesting note, another thing people don't see (yet) is the impact working remotely will have on the aviation industry. Before, it was never taken seriously for large segments of the business travel industry, but it will be now (what with all the internet and teleconferencing capabilities).

ETA - Oh, and fewer airlines. Common thinking right now is at least one, possibly two, of the majors will go down. In addition, guys like F9 and NK will probably bite the dust.

The complexion of the industry will change too. Had it not been for the MAX debacle, ordinarily I would have said AA would be one of the first of the majors to fall, but they're in a really interesting position.

They've got a lot of old aluminum (a LOT), so they are probably the best positioned to park a whole bunch of equipment without taking a major hit. That will make them an attractive acquisition target. This was kind of the same position NW was in pre 9-11.

DL is on pretty shaky ground too. Heck, they all are.

a reply to: thebozeian

This was rather interesting.

a reply to: Zaphod58
Nothing new there in 25 odd years....QANTAS engineers has always been proud of being amongst the best in the world.Its a pity management never thought that way..
Its not just the Airline Industry has changed,its the whole world society that will and has changed.History is pockmarked by these events that upend everything we know..

a reply to: Zaphod58
Oh yes it is interesting isn't it?
I haven't seen that as I have been officially stood down and like many in my position in both this company and many others around the world I'm taking a few days to switch off and gather myself. For the record I am acquainted with the Secretary of the Association that wrote this letter and I'm well acquainted with the President of the ALAEA who is an engineer on one of my sister crews and a damn good man (he also holds some world records for canoeing in Hawaii but that's another story!). What this shows is that some people are born shameless corporate psychopaths who will use any and all extraordinary events to their own advantage to screw people over. And that's one reason I am concerned about the future.
Edit: Case in point, the company now refuses to pay entitled sick leave if you are designated as being stood down. This is being challenged by unions in Federal courts here. I personally know at least two engineers who are on extended sick leave who are terminally ill and will be cutoff from tomorrow. What kind of utter sick bastard does that to someone?

Should be leaked to the press...

Only one passenger flight over the Atlantic atm its so weird seeing this. All the rest are cargo flights. Titan Air which I think is a chartered airline bringing people home

And the aliens in orbit saying.."Where did everyone go?"

If any companies in this country ought to receive gov't support ("bailout" whatever you want to call it), IMO it is small business owners, and then the mainstay American transportation companies, airlines being one of them.

One of the main objections I had against Romney when he was opposing Obama was his sentiment that we ought to let the automobile manufacturers in this country fail and enter bankruptcy. REALLY Mitt...tell me more. Such an opinion didn't/shouldn't be surprising coming from somebody of Romney's background, who vacuumed up wealth by leveraged buyouts. He and his cohorts at Bain Capital would target distressed companies (e.g. Toys'R'Us) whose balance sheets were in trouble. They would promise fast turnarounds, "cutting the fat" in corporate expenses, and building a blueprint for future profitability. Instead what they did, was take on increasing amount of debt for the company, from which they extracted tidy 'consulting fees' for their services in trying to revive the struggling companies. And sure enough, they'd follow their promise of trimming the company's fat, but they wouldn't stop there, slicing and dicing any and all overhead in sight, downsizing and selling off store locations, laying off waves of employees, and generally cashing in on any existing assets, trademarks, product lines, that the company held. In the end, when the company had been eviscerated and filleted down to the bone, Bain and co. would parachute out of the deal, leaving the company further in debt than when they arrived (hence the leverage part), whilst the Bain Bros parachuted out with nice exit packages.

Why do I bring this up. Well, we know that airlines are perpetually in trouble it seems, under capitalized, eking out existence on minuscule profit margins, and vulnerable to price fluctuations in fuel and parts/equipment they need to keep their fleet going. If we don't choose to help bolster the US airline industry, carrion searchers like Romney are going to target the airlines for such dealings.

Who do you think the buyers are for any assets that would enter into a leveraged buyout transastion. You think people like Bain are going to winnow down the pool of investors to other American companies and buyers? You think Mitt is going to turn away cash to keep US corporations controlled by US interests? Or do you think they are going to take the best offer on the table.

How'd you like to recommence your travels on airlines, when and IF this whole thing turns rightside-up again, on equipment that is ultimately not under the ownership of US managed companies. Don't get me wrong, there are plenty of very solid airlines that are not US owned (Lufthansa, Emirates, Qantas come to mind). But ultimately,....don't you feel at least some comfort in knowing that the airlines servicing domestic flights are headquartered and managed right here? That have some semblance of connection to our nation? That have vested interest in keeping Americans employed, and traveling in a safe and efficient/effective manner?

IDK maybe this is all just my personal hangup, and the prevailing thought here is let the chips fall where they may, and if our domestic airline industry ends up gutted and outsourced, "hey, it's their faults for not having contingencies and cash stashed away to weather such a financial story"

I think capitalism is the most efficient, effective and fair economic system this world has ever seen. But are there no limits when it comes to ownership of industries we rely on for safety, and for which we want accountability to the US public? It's probably irrational, and I don't even buy GM/Ford products, but there was something in my mind where I wanted those corporations to endure. Purely a gut reaction I know, but that's just how I see it.

I feel the same about US airlines and plan manufacturing companies, along with the supply chain corps. that support them. It is in our interest as Americans to not let them fail and end up owned by outside interests, that ultimately don't really have skin in the game, at least for domestic service.

If ever there are companies worth bolstering with government aid packages, it's airlines, cars and other transportation related industries.

IMO we should be prioritizing helping out these businesses, and not catering to the big banks and financial institutions and other such sectors that always cry poor and turn to Uncle Sam with outstretched hand. It's these same companies that are swimming in cash, and have a proven track record of malfeasance and corruption that harms American citizens (mortgage backed security meltdown, derivatives, disgusting treatment of customers like Wells Fargo).

Well, just announced here in the UK that British Airways are suspending 36,000 staff. They will not come to work, but keep their jobs. In the UK the Government will pay up to 80% of a person's salary and this is capped at £2.5K per person, per month. At least these staff will have a modest income and will be retained. BA pilots have separately agreed on a 50% salary reduction.

BA is a global company, so not sure how a BA employee in (say) New York is being treated i.e. US government salary support and job suspension.