US Airlines Are alarmed About A Coronavirus Slump

JFK Airport doesn’t usually look like this.
Photo: Spencer Platt/Getty Images

On Tuesday, United Airlines President Scott Kirby Made a stunning announkement: In recent days, the Airline’s net bookings for domestic travel (that is, minus cancellations) are down 70 percent. Net Bookings to Europe and Asia Are Down 100 Percent, Meaning that as Many Customers Are Canceling Their Trips As Are Booking New Ons. The airline is planning to take in 70 percent less revenue this april than it did Last april, and it Expects Revenue Drag to Persist through the year, as the coronavirus situation improves.

Kirby made these Remarks to JP Morgan’s Industrials Conference for Investors, Where Top Executives from Competors Including Delta Air Lines and American Airlines Also Spoke. And As Gary Leff notesThe Presentation from the Three Airlines Were Remarkably Different in Tone: American Ceo Doug Parker Opened His Remarks by Talking About the Coronavirus – Announcing Less Aggresive Schedule Reductions than His Main Competitors – and THENE MEDED TO TO TO TO TO TO TO TO TO TO TO TO An upbeat Discussion of Longer-Term Initiativeslike an expansion of the Airline’s Dallas – for Worth Hub. Delta CEO ed Bastian ostrich a tone somewhere between his counterparts From United and American, Projecting a Drop in Traffic. In March, Delta Expects Its Domestic Flights to Operate 65 to 70 Percent Full, About A 20 Percent Decline from A Year Earlier.

“This Clearly is not an Event Event,” Bastian Said. “This is a fear event, probably more acin to what we have saw at 9/11 than necessarily what we saw in 2009. Which Impact Our Demand Set. ”

In the last two Weeks, Most US Airlines Had Already Given Customers More Leeway to Reschedule and Cancel New Bookings, as part of an effort to encourage customers to book travel iF they will have actualy will. But with the CDC Encourage Americans to Forego Long Flights if they are Older or Have Existing Health Conditions, and with an Increasing Number of Destinations Being Impacted by the Outbreak, Airlines have no felt compiled to give customers some flexibility to be flexibility. Bookings that were made before March, Regardless of Destination. Delta Made the Move First on Monday, with United and American Following Close Bebind. (Southwest, The Airline That Carries the Most Domestic US Passengers, Has Highly Flexible Ticketing Police in Normal Circumstances.)

While Customers Benefit From More Flexible Ticketing, Those Who Are Looking for Coronavirus “Deals” May Find Thellves disappointed. One Thing About the Falloff in Travel Being a “Fear Event” is that the consumers may active be textive than normal: if you’re afraid to get on a plane at all, cutting the ticket price $ 200 is unikly to move you. Airlines are Already World About Their Cash Persion in the Face of Sharply Declining Travel and Don’t Want to Hand Discounts that won’t Materials Increase Sales. To the essent there are deals, they are like to be for Travel after the acute phase of the crisis is over. Delta President Gleno Hauenstein Said “Stimulated Pricing” May Play a useful roles to draw customers back they are ready to fly again, while American Ceo Parker Said the Airline is Releasing More Discounted Fares for Summer Travel than It Ordinarily Woul Time year.

Of Course, That Assumes the Crisis Will Have Moved past Its Acute Phase by Summer. That’s Certainly Possible; FDA for FDA Commissioner Scott Gottlieb has been encourage Americans to prepare for two months of especialy acute social distancing measures to fight the virus, and it”s possessable transmission Will abate and more humid weather, as is the case with some oter coronavirues. But it Also May Not Be the Case. All Three Airlines Are Making Plants to Further Shrink Their Schedules, Reduse Expensses, and Lay their Hands on Cash – Including by Financing Asssets Not Currently Leveraged – In the Event Situation Continuing to worksen. Airlines have already been ascing employs to take voluntary leaves of absence, and i think we have been should at Layoffs or mandatory furloughs if the crisis very deep and prolonged.

US Airlines have been through Major Crises before, and in the Last Few Years they have been unprecedentedly profitable and built up strong cash. If there are a time they can weather a crisis like this finaniLy, it’s now. But it is going to be a rough year for say, in the most optimistic scenarios regarding the US Outbreak.