U.S. Airlines Demand Bailout

U.S. AIRLINES 
SUMMARY:
U.S. airlines are demanding a second $25 billion bailout, for $50 billion total.
Forget it, I say!  The airlines wasted $45 billion on share buybacks since 2012 that should have been saved for the next recession. Taxpayers have already funded too much of their “daily cash burn.”  U.S. taxpayers are also sitting on billions of dollars in tickets they can’t get refunds for, though they can use the “credits”, hopefully, in the future. U.S. airline debt debt needs to be restructured in bankruptcy court.


DETAILS:
U,S, airlines that accepted their portion of the $25-billion airline bailout under the CARES Act can now start involuntary layoffs. They used a lot of voluntary buyouts, and early retirements, since March 2020. They induced  employees to temporarily or permanently leave.

American Airlines CEO Doug Parker told CBS News on Sunday that no bailout means “there are going to be 100,000 aviation professionals who are out of work, who wouldn’t be otherwise.”  Including 18,000 employees American Airlines has threatened to lay off.

American Airlines, from 2013 through Q1 2020, spent $13.1 billion of cash on share buybacks.  2013 was the year Mr. Parker became CEO of American Airlines.

Delta spent $11.7 billion of cash on share buybacks.

Southwest Airlines spent $10.9 billion, starting in 2012

United $8.9 billion.

The big four airlines wasted $44.6 billion in cash on share buybacks from 2012 through Q1 2020, and now the airlines want an additional $25 billion from the taxpayers?

Business is still down nearly 70% from last year, according to TSA airport screenings. Business travel usually rises after Labor Day, and the passenger count rises sharply. But not this year.

The most profitable business segment has been crushed as companies still avoid sending their people to conferences and large meetings. And job applicants are interviewed remotely. Older vacation travelers are avoiding getting on planes for health reasons.

For international travel, flight restrictions and quarantine requirements in the US and other countries make this a tough situation for willing American travelers.

The airline industry invented a new metric during the Pandemic: “daily cash burn.” The idea is to make this number smaller by cutting capacity, shedding employees, and reducing costs.



EUROPEAN  AIRLINES:
in late August, air traffic was still down 51%. Them COVID cases surged, prompting governments to reintroduce travel restrictions and impose quarantine measures.

In the first two weeks of September, air traffic was down 53% compared to the same period in 2019.  Intra-Europe flow remains 50% down compared to 2019 while all other flows are down 70%.  Madrid was down 16% from mid-August, Barcelona and Paris 14%, Athens 13%, Paris CDG 12%, Amsterdam 9%, London/Heathrow 7%, Frankfurt 6%, and Munich 5% from mid-August.

Quarantines are having the same effect as lockdowns. Fear of getting COVID, weak consumer confidence, unemployment, and surging business closures are taking their toll.

First class and business class combined last year generated 30% of airlines’ international revenues. Both are way down. Private aviation companies offer COVID isolation for those who can afford it. According to the Times of London, one operator, PrivateFly – which charges £10,000 for flights between France and the UK – saw its bookings triple in August.

Meanwhile, commercial airlines' revenues, cash flows and earnings have all been hit hrd, while costs for maintenance of grounded jets remain high.

Airlines and airport management companies are asking governments to introduce airport COVID-19 tests for departing international passengers, to replace the quarantines. But rapid antigen tests are more likely to miss positive cases of this long incubation period virus, than laboratory-based tests.

EUROCONTROL now expects the number of flights in Europe to be down 60% year over year by January, compared to its prior estimate of a 20% shortfall. It projects 2020 flights of around 6 million — 55% below 2019’s total, resulting in a €140 billion.total revenue losses for the industry.

Ryanair, the continent’s biggest airline by passengers, on Friday unveiled plans to cut a further 20% of its flights from its October capacity, to about 40% of October 2019 levels. Possibly larger cuts in the winter.

German travel operator TUI , whose shares have plunged 71% this year, has already launched a new restructuring program that will affect up to 8,000 jobs. TUI was given a €1.2-billion funding package from the German government in August.

For October, Lufthansa seat reservations stand at less than 10% of year-ago levels.  The UK-based and partly Qatari-owned International Airlines Group (IAG), whose holdings include British Airways (BA), Iberia and Vueling, has already cut capacity for the Fall to 60% below 2019 levels.
IAG’s stock has plunged about 60% this year.

“Last week we flew 187,000 passengers. The same week in the previous year we flew almost a million,” said BA chief executive Alex Cruz in late September. “We remain worried about the virus in the winter season. People are still afraid of traveling.”