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Can the aviation industry survive the cold winter after the new wave of epidemics spreads through Europe and the United States?
Author: elegant
[ 美国航空在10月底表示，将出售最多10亿美元的股权以筹集更多资金，增加季度末136亿美元的流动资金储备。 ]
After the new wave of the corona pneumonia epidemic spreads through Europe and the United States, will the aviation industry survive this cold winter?
“Historically, prior to the COVID-19 pandemic, Europe and the United States exhibited roughly similar seasonal patterns, that is, November, January and February are the low periods of passenger flight activity.” Chief Executive Officer of Alton Aviation Consultancy, an aviation consulting firm Adam Cowburn told CBN reporters: “We don’t think there will be a huge demand for travel in the US or Europe this winter.”
“Winter is always tough for the travel industry, but this time it will be even more cruel,” said Paul Charles, CEO of travel consultancy The PC Agency. “Layoffs and losses will be universal phenomena worthy of sympathy. But what worries me is that it is easy to block and difficult to restart.”
Indeed, after countries like Germany, France and the United Kingdom successively returned to blockades, major European airlines are reducing their capacity plans by the end of the year. But in contrast to this, while the epidemic and the losses remain severe, US carriers such as American Airlines and Southwest Airlines have said their planes are getting more and more crowded.
“Two of my colleagues have decided to fly to other states on Thanksgiving for the holiday, and they are both going out for the first time this year. One of them is to attend a wedding, and she said she will do acid tests. nucleic before and when I return. “Ms Mao, who works in California, told a reporter for China Business News,” However, there are also many people who would go out in previous years and honestly choose to stay home. “
Why are American planes getting more and more crowded?
Koben told the CBN reporter: “Compared to the United States, if we look at the same situation before the new corona pneumonia epidemic, Europe exhibits more obvious seasonality than the United States. Its summer travel peaks in July and August are higher than 1. January and February lows are approximately 50% higher With the increase in the number of new cases of coronary pneumonia and increased government restrictions, we expect tourism demand to weaken after winter significantly “.
In Europe, Air France said at the end of October that it would adjust its capacity to 35% of the same period of 2019 in the fourth quarter, lower than the 50% previously forecast. Sister airline KLM will fly 45% of its flights in November, 10% less than before. United International Airlines said it will reduce its capacity from 40% of previously planned flights in 2019 to 30%. The German group Lufthansa said it will grounded another 125 planes and reduce its capacity to a quarter from last year. Previously, Lufthansa had planned to return to 50% of normal capacity before the end of the year.
In the United States, some airline executives said they have seen some ebbs in demand, but with bookings for Thanksgiving and Christmas still relatively strong, they are cautiously optimistic.
Data from the US Transportation Security Administration (TSA) airport security check shows that the number of people traveling is now at the highest level since mid-March, and daily passenger flow in mid-March. October surpassed one million for the first time since March. The recently released vacation travel confidence report by Hopper, a US travel ticket analytics company, also indicates that the number of US travelers may increase. Almost 40% of those surveyed said they plan to travel on vacation this year, of which 75% will travel by plane in December, and 21% said they will cancel their travel plans from previous years.
Southwest Airlines Chairman Tom Nealon said the recent spike in the number of confirmed cases of new coronary pneumonia does not appear to have degraded bookings for the holiday season as a result of the July wave of infections. “Maybe the whole world hasn’t seen a particularly large number of hospitalizations and deaths, although I know both are actually increasing now,” Nilun said, “but perhaps because people are not paying attention to them as they did in the past. “
Travel expert Amanda Norcross explained: “Since the lockdown and quarantine began this spring, this is the first opportunity for many people to visit family and friends, and they are likely to get a lower ticket price. After all , funding is tight. Airlines compete to offer the best prices. “
According to data from the price-tracking website Scott’s Cheap Flights, the price of a return flight from New York City to Nashville, Tennessee during the holiday season is just $ 71, much lower than the $ 300 of years. previous. A round-trip ticket from Chicago to Las Vegas is usually priced at $ 350, but is now priced at $ 81.
Government financial support becomes the key to “get through the winter”
Ahead of the latest round of lockdown measures in Europe, the International Air Transport Association (IATA) predicted that the global aviation industry is expected to burn $ 77 billion in cash in the second half of the year. In a new analytics report released last week, IATA stated that next year’s total industry revenue is expected to be 46% lower than $ 838 billion in 2019. Without additional financial relief from the government, the midsize airlines only have 8.5 months of cash on hand. The Airports Council of Europe also declared in late October that around 193 of Europe’s 740 airports could be on the brink of bankruptcy.
In the United States, the top four US airlines have lost more than $ 25 billion in losses this year due to the epidemic that engulfed travel demand. Although some airlines are more satisfied with their bookings during the Christmas season, data from the US Transportation Security Administration shows that travel traffic continues to decline by more than 60% from last year.
“The situation is better than before, but it is far from sustainable,” said Vasu Raja, American Airlines’ chief financial officer. Southwest Airlines said it expects its fourth-quarter capacity to be reduced by 40% compared to the same period in 2019, while American Airlines, which also said demand has improved, said it plans to reduce its capacity by more than 50%. % in the fourth quarter.
In this context, whether the government can provide companies with sufficient support has become the key for airlines to survive the virus crisis safely. According to Bloomberg News analysis of the financial health of global airlines, airlines in jurisdictions with insufficient support for government policies are more likely to fail.
“Governments around the world have provided more than US $ 100 billion in support to troubled airlines, including US $ 25 billion in the United States, and numerous multi-million dollar programs in European countries such as France and Germany.” According to a financial journalist, “Government support is one of the important factors supporting the survival of the major airlines in the United States and Europe.”
“Many governments have done a good job of financially supporting employment in the aviation industry,” said IATA Director General Alexandre de Juniac in October. “Where the government has not, we see it is bankruptcy. Airlines continue to consume cash and this is expected to continue into next year. Without the second batch of financial assistance, many airlines will not be able to survive the winter. “
However, Kao Ben also added that in addition to government support, airlines have also taken other private sector measures to ensure that they do not go bankrupt. For example, financing agreements for the sale and subsequent lease of own aircraft, renegotiation of terms with manufacturers and lessors, search for concessions from other suppliers and reduction of labor costs through layoffs, freezing of hiring and review of salaries.
For example, airlines have been cutting costs and raising as much cash as possible to survive a long recession. American Airlines said in late October that it would sell up to $ 1 billion in stock to raise more funds and increase its liquidity reserve at the end of the quarter by $ 13.6 billion. Last month, the company also laid off 19,000 workers, but said that if Congress passes a new round of assistance to airlines, they will be pulled.
Although Asia Pacific economies such as Singapore, New Zealand and Australia are attempting to increase travel through the “travel bubble”, IATA has stated that extensive testing for novel coronaviruses is the only way to revive the travel industry. the aviation. But since the virus is elusive and typically has an incubation period of two weeks, this idea has yet to be widely promoted.
Kauben told the CBN reporter: “When most people feel confident in carrying out regular face-to-face communication again on a large scale, the aviation market will restore trust. This will be achieved by some combination of vaccines. and improved treatments for new coronary pneumonia “. Once these methods are widely applied, domestic aviation activities should be able to resume fully by mid-2022. Given quarantines and other border restrictions, the speed of recovery in the international market may be slower and may not return to normal conditions. before 2023 “.
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