Aviation Industry Updates: April 15, 2020

U.S. Airlines Reach Agreements for Federal Stimulus Aid

KEY POINTS:

• The Cares Act protections are less of a grant and more of a loan with additional strings attached.

• CARES Act funding for payroll only backs approximately 76% of payroll based on expenses from late 2019. This despite most airlines having experienced growth through COVID-19 halting air-travel.

• Due to higher demand than expected, the award amounts are smaller than required for individual airlines. In the end, the awards were significantly scaled down.

• While the purpose of this capital injection is to protect jobs, certain CEO’s have pivoted to discussing how these bailout funds will help their passengers vs focusing on how they will protect their employees.

*at time of publishing not all Airlines had released their stimulus package amounts; Raven will update as information becomes available

>> Click here to read the entire article written by Michael B. Baker of Business Travel News

Analysts Estimate Up To 1,000 Aircraft Could Be Retired In 2020

KEY POINTS:

• Becker believes that US airlines will retire between 800 and 1,000 aircraft this year, leading to a much smaller aviation industry than was previously seen.

• She predicts huge job losses in the sector too, signaling that many of the furloughs that we’re seeing now may well evolve into permanent layoffs. “We believe airlines will be 30% smaller at the end of his year than they were at the start of the year. Also, we expect there will be between 100K and 200K fewer employees at the end of the year than there were at the beginning of the year.” [Click here to read quotes from Delta and United that reinforce this analysis]

• If Becker’s prediction is right, we could see many more aircraft from the fleets in the US disappearing by the end of 2020. “While many of these will be temporary storage, many of these aircraft will never resume service. We believe the airline industry will look very different when we get to the other side of this.”

• As well as her take on the shape of the US fleet in the future, Becker has made one of the most damning predictions to date for the return of air travel demand. She told Seeking Alpha, “Demand is 5% of what it was in February, and we continue to believe it will take 3 to 5 years for domestic demand to return to 2019 levels and 4 to 6 years for international demand to get back to those levels.”

https://twitter.com/CowenResearch/status/1249674395095883782?s=20

• The author of the article summarizes: “While we may see an uptick in aviation activities before the end of the year, it’s going to be a long, long time before we see the type of demand that was typical of pre-coronavirus, if it ever comes back at all.

>> Click here to read the entire article written by Joanna Bailey of Simple Flying

Video Interview: Tom Nealon, President Southwest Airlines

Watch as Tom Nealon is interviewed by the Global Business Travel Association on how Southwest is performing in these unprecedented times. How does this compare to previous downturns like 9/11 and 2008? How does Southwest see the future? Plus much more from a top executive in the know.

“We don’t want to furlough employees, we don’t want to ground airplanes [and] we don’t want to close cities. All of that depends on passengers and air travel returning.”

Additional Resources

How Does the Coronavirus Compare to 9/11?
How to Survive Disruptive Change
Are Furloughs Coming?
What Should Pilots Do In These Uncertain Times?