The situation is very fluid.
By MC01, a frequent commenter on WOLF STREET:
On April 2, the Civil Aviation Authority of China (CAAC) held a press conference in Beijing to update the press about the aftermath of the Covid-19 lockdown. Internal air traffic more than doubled since the depth of the crisis but still operates at only 42% of the capacity it had before the crisis.
The main drivers of this recovery have so far been migrant workers returning from their home provinces to their jobs in big economic powerhouses like Shanghai and Shenzhen. As final restrictions on internal movements will be lifted on April 8, air traffic will begin to pick up at a faster phase, as more aircraft are pulled from storage as demand increases.
International passenger flights are at the present limited to 134 per week, mostly originating from four countries (US, Japan, Thailand and Laos). On top of this, special charters may be authorized by CAAC, like the twice a week Air China flights to connect the little army of Chinese healthcare specialists sent to assist Italy.
Very intriguing is how internal cargo flights have increased 18% compared to pre-epidemic weekly averages. The CAAC has been at the forefront of incentivizing using idled passenger aircraft to carry freight. For example, China Southern is using some of its Airbus A330 on regular freight flights to Europe; and Qatar Airways operates daily “cargo hold only” flights between Shanghai and Abu Dhabi.
Ironically, Boeing is well placed to take advantage of this situation: In December 2019, it inked a deal with the Guangzhou Aircraft Maintenance Engineering Co (GAMECO) to convert the 737-800 to a freighter configuration. Boeing and GAMECO already have 130 firm orders for conversions; and as air freighter traffic booms and larger stocks of used aircraft become available, these numbers are sure to increase a lot.
Chinese firms as a whole seem to be optimistic about a quick recovery of the travel industry worldwide: Alibaba, the hi-tech giant, has just announced investing an undisclosed sum in Israeli travel tech startup Hotelmize, while booking startup Klook opted to sink “under $10 million” into Huizhuche, a car rental platform whose original investors claimed was worth “hundreds of millions of dollars” back in 2016. Similar deals are being announced on a daily basis.
Is this merely a case of excessive optimism or are these companies astutely taking advantage of the fire sale that has just started? Only time will tell.
One company that is surely looking to the future with a lot of optimism is Alitalia. The Italian government took advantage of the general chaos caused by the Covid-19 epidemic to re-nationalize Alitalia, an operation that will cost taxpayers €600 million just to pull the perpetually money-losing airline from administration (a form of bankruptcy). On top of this, Alitalia has €1.2 billion in assorted liabilities to be dealt with and burned through cash at a frightening pace even before the crisis started.
Taxpayers will be elated to learn that while they are left in complete uncertainty about their own future and threatened with longer and more crippling lockdowns, the Italian government is diligently burning the midnight oil to come up with a “restructuring plan” for Alitalia.
Part of this plan is how to deal with one Alitalia’s chronic diseases, the extremely high cost of leases. Alitalia has a fleet of 113 aircraft, of which 72 are leased. This is by far the highest rate of leases among flag carriers worldwide and would be an anomaly even among low-cost and charter-focused carriers.
Most of these aircraft had originally been bought by Alitalia outright, but were then sold to leasing companies such as AerCap and leased back in “sweetheart deals” to raise quick cash over the past decade. This precipitated a vicious circle as leasing costs spiraled out of control (they presently stand at €240 million a year) and deprived the airline of high-quality collateral to secure loans, thus sending lending coasts higher and higher.
Under the present tentative plan “up to 43” leased aircraft will be returned shortly to lessors to cut expenses, albeit the exact number is still shady.
And then there’s the biggest bone of contention: the workforce. Alitalia has long been notorious for having a very large and very expensive to maintain workforce. Of its 11,000 employees – a high number given the size of the company – about 6,800 are on furlough, receiving 80% of their wages. By contrast, the average furloughed Italian worker can cash unemployment benefits of up to €600 a month and in a few weeks may not have a job to return to.
In the past, cutting this workforce has proven to be extremely difficult and expensive due to the enormous severance packages demanded and invariably obtained by Alitalia unions for their members. But now Alitalia has been pushed into near-irrelevance on the domestic market by Ryanair and EasyJet. And with well-funded and well-organized competitors such as Lufthansa and Emirates serving international travelers, it’s likely Alitalia unions may have a hard time pushing their extravagant demands on taxpayers.
And finally some good news. Qantas, the flag carrier of Australia, inked a deal with their pilots to make Project Sunrise a reality. Project Sunrise is an ambitious plan by Qantas to directly connect Melbourne and Sydney with London, New York and Paris. The Australian flag carrier has been conducting test flights between these locations carrying teams of volunteers and a medical staff to monitor the effects on crews and passengers of the flights that may last up to 21 hours. With the pilot deal done, Project Sunrise regular flights are set to start in 2023.
Qantas originally planned to order a number of Airbus A350 to carry out these flights, but with the collapse in air travel worldwide, the order has still not materialized, and may not materialize at all. The Project Sunrise test flights have been carried out using Boeing 787, so Qantas is weighing if perhaps using these aircraft may be an economically viable option. Good deals are made in bad times, or so the saying runs. By MC01, a frequent commenter, for WOLF STREET
All eyes are on China to see how air transport will change in the aftermath of the crisis. Read… “Not All Airlines Will Go Bankrupt”: How Will Coronavirus Travel-Bans Impact Airbus, Suppliers, and Airlines?
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– I consider project Sunrise to be EXTREMELY optimistic. To start in 2023 ? With all the higly indebted australian households ?
Those planes could be bringing tourists into Australia as opposed to Australians visiting them.
Looking it up project sunrise, at least those writing it about, give off the impression, it’s a vanity project. See 2 sunrises in 1 flight. Fly between any 2 cities in the world, no stops.
Its still a 2 stop flight to get to London, but the stop is in Australia.
Not if you start in Sydney
Like the present Singapore-New York direct flights, this is aimed chiefly at business travelers.
International business traveling will resume far sooner than anybody expects, pretty much as soon as the first restrictions are lifted, hotels are re-opened and aircraft are pulled from storage.
But governments need to work with each other on this. Germany and the US have worked very well together on the matter so far, but the same cannot be said about other European countries. But what do we expect from countries that harass joggers and dog walkers while drug dealers go about as they please?
I think it Will be to optimidtics 2023. A 787 must have incredible lot of fuel so how many passengers Will it be in The plane?
Read my reply below for the horrible technical tidbits: Singapore Airlines was already doing regular 19-hour flights before this crisis blewup.
As the present generation of widebody aircraft (Airbus A350 and Boeing 787) matures and the firmware regulating them and their engines is honed to perfection such long flights will become more and more commonplace: right now the two biggest challenges are agreements over pay and compensation for the crew (which Qantas proved can be solved in satisfactory manner for all parts involved) and financial viability.
Ironically enough should fuel prices go up ultra long flights will become more and more appealing, as they allow big fuel savings (no landing and takeoff procedures at stopover destinations) which are bound to increase as procedures are tightened.
In my opinion the big question is just how many people will want to stay on an aircraft for 20 hours. Business travelers looking to shave off quite a few hours are obvious candidates but 20 hours in a small confined place in the aftermath of a big virus outbreak may not appeal to a lot of folks, hospital-grade air filtration or not. We’ll see: right now we have bigger fish to fry.
MC01, “International business travel will resume far sooner than anyone expects…”. Really? With lockdowns bringing global economies to their knees, profits vaporised and corporate debt at historical high and rising even more in the days ahead, I would venture to think that business travel would be the last to revive. Especially when, during lockdowns, work from home and teleconferencing has become the new normal. But we will see what we will see.
Corporate debts will be bailed out at 120% of retail value after a few token bankruptcies and, as we know, profits is such an outdated idea. The only thing that matters is Flow!
“International business traveling will resume far sooner than anybody expects, pretty much as soon as the first restrictions are lifted, hotels are re-opened and aircraft are pulled from storage.”
Or, business traveler that have been forced to use teleconferencing, may ultimately end up concluding that teleconferencing is the best way to fly.
Not having a stop over with less chance to get infected. Problem is it is Britain so are you really worried that you get infected on the way with it being one of the epicenters
If there is a worse way of doing something British Management will find it!
Wolf, hope you are doing well. Super informative post as always. Miss hearing your updates on Youtube, do you have any other audio or podcast channels?
I’ll do them again once I have a little extra time. They pretty much take all Sunday. In addition to all heck having broken loose that I need to cover, I’ve got to get my corporate and personal taxes done GRRRR.
Maintain cover, and keep your powder dry Wolf. We need your deciphering of the insanity around us!
MC01, also a super informative post from you. Hope you are well! :D
Some good news for Boeing, for a change.
And, ironically, their stock was up 20% today.
“Ironically, Boeing is well placed to take advantage of this situation: In December 2019, it inked a deal with the Guangzhou Aircraft Maintenance Engineering Co (GAMECO) to convert the 737-800 to a freighter configuration. Boeing and GAMECO already have 130 firm orders for conversions; and as air freighter traffic booms and larger stocks of used aircraft become available, these numbers are sure to increase a lot.”
From what I’ve heard High Frequency Traders (HFT) have fine tuned their software to trawl the Internet for the number of Covid-19 new cases and victims in the worst affected areas, including mine.
The last few days have seen a big drop in both around here, so HFT are buying stuff like there’s no tomorrow.
But as the saying goes, a swallow doesn’t mean it’s Springtime yet. The Italian government has zero intention of restarting the country so we have no idea of how serious the damages to the economy are.
All these pandemic’s have waves, thus why should the Italian’s lift on the first wave, when they know a second wave is coming, and a third.
How would you prefer to have it? Go back to normal now, then then back to more austere lockdown in a month?
You have not seen anything yet, just wait until the 100K European’s trapped in Asia, start returning; Right now all return flights to EU are still shutdown from Asia.
The USA is the worst some 100K SE-ASIANS are trapped in USA, and want to come home, largely because virus-med here is 100% free, even the private hospitals must bill the gov. SE-Asian workers in USA are terrified they’ll get sick and die for lack of cash.
HFT are trolling the death zones looking for buying clues? That says so much about business, doesn’t it? Sounds like a James Bond movie theme. Misery and mahem good business for bad guys….so lets take out the middleman called chance.
I guess that explains the Market upticks. Reminds me of when I came up with the bright idea of burying salmon carcasses in the greenhouse. Our biggest crops were flies…..for about 2 weeks.
One thing about airlines, they have always operated on hope, dreams, other people’s money, and the ever anticipated cheap fuel. Without free money and a public able to stock up on more debt, (including business), it will never come back the way it was BV. But just my opinion.
As for mass conversion of aircraft into repurposed freighters, it reminded me of the image circulating after Kosovo, a car hauled by horses. Airfreight is a good idea and makes sense, (masks and ventilators to NY), when freight is light or time is short, but then the wheel or hull takes over. It all comes down to how much money is left to burn After Virus. Society and priorities might be completely different going forward. For example, you can kiss off the cruise ship industry and associated tourist travel. Alitalia as flagship carrier might be just a dream of the past, like Pan Am and all the other flying ghosts.
What will tax payers stand for next time around?
>>I guess that explains the Market upticks.<<
Oops, you didn't get the memo. The bear market is over as of yesterday.
Going forward the operative words won't be "green shoots" like in 2008. Rather, the proper words to use this time around are "pent-up demand". And no need to worry about a second wave of the Corona virus or debt downgrades.
Paulo, look at stock markets today: they surged all day long pulled by what I can only call mindless optimism: I keep close tabs on Covid-19 numbers in my province and I have learned to be extremely cautious on the matter.
But then it was announced that British PM Boris Johnson’s health conditions have suddenly worsened and he has been rushed to the ICU. Stocks crashed.
Then however came news Austria and Denmark have detailed plans to fully re-open their economies in stages over the next four weeks month including, hear this, bars and restaurants. Stocks shot up again.
Your plan reminds me of when my grandfather dumped freshly cut grass in the pond he had on his farm: he had big carps in there up to 3 ft long.
The carps feasted on the grass and died. Most had literally burst open.
I had to fish them out of the pond one at a time, put them in a tractor trailer and go and bury them near the compost heap.
There’s a very good reason I have refused to eat fresh fish ever since…
After all the stimulus packages, there will be plenty enough money to burn in the airline industry.
Thank you for the report MC01.
Those are about as distant as any two cities can get when one looks at the flight paths of Project Sunrise. All six have distances between 16,000 and 17,000 km. The furthest two points on the equator are 20,000 km.
From Boeing’s website, comparing the range between 787-8, 787-9 & 787-10, the 787-9 has the longest range @ 13,950 km.
I am pulling for the 787 in this one. Please keep us informed as to how it performs, and thanks again.
Qantas had an eye on an Ultra Long Range (ULR) version of the A350-1000, basically the stretched version of of the A350-900ULR presently used by Singapore Airlines.
The ULR version sacrifices passenger numbers and cargo capacity to increase fuel capacity and improve fuel burn: Singapore Airlines carries just 161 passengers in two classes (about half as many as an ordinary -900) and 20 LD3 cargo containers against the usual 36. This allows an extra 24,000 liters of fuel to be carried.
On top of this the ULR has a few small aerodynamic improvements: nothing drastic, as one of the original requirements of the ULR was the ability to bring it to standard A350 configuration quickly and without massive structural changes.
We also need to consider that as aircraft and engines mature their range and ETOPS keeps on improving thanks to continuous tweaks to FADEC firmware and operation procedures. That’s the beauty of this generation of high bypass turbofans: they can stay on the aircraft for so long they are designed to be improved with a computer.
The Sydney to London flight will stop in Darwin.
The closest Australian cities to London are Perth and Darwin. Perth is 7,818 nautical miles distant and Darwin is 7,481 nautical miles away. The 787-9 can fly 8,500 nautical miles.
I say we need an FDR like New Deal but with Social Distancing. We need a leader like FDR who says there is nothing to fear but fear and lockdown isolation itself, and redirect the New Deal we just enacted for Wall Street and turn it around for us the people.
Air New Zealand is working with alliance partners in the region to get airfreight capacity available and moving again. There’s no one travelling topside, so the belly is where the surge capacity and the profitable cargo is. You can’t suddenly turn a passenger Dreamliner into a FedEx longhauler, but you can certainly do more useful things with it that have it sit idle and burning through operating cash. Someone’s gotta get fresh milk / dairy and chilled seafood to Shanghai…
I must report the Alitalia flight attendants are very easy on the eyes.
Why are we bailing out the airlines? This is capitalism. They should go bankrupt and be reorganized or liquidated. Let other companies take their place. We have capitalism for the masses and socialism for the corporations. Enough is enough!
For as long as I live, I have always heard Alitalia was in trouble one way or another. Always on the brink of bankruptcy. In many ways it is symbolic for what is wrong with the Italian economy: debt burdened, oversized workforce, too stringent union demands. And good luck firing someone in the private sector to keep your company lean and mean – in a former life I have worked for Randstad, which specializes in temp work and staffing services, and when in full expansion in the nineties, Randstad like so many others in the field had to avoid expansion in Italy, simply because of the labour laws there (temp work was a big no no, so no flexible work solutions possible when all other European countries were catching that wave).
We had a similar problem with our national airline, Sabena: not a bad company as such (notwithstanding the running joke: SABENA, Such A Bloody Experience Never Again), but the paxpayer was on the hook for far more money than justified by its output/services. Until the government finally dediced to pull the plug.
I have endless sympathy and admiration for what the Italians are going through and for the current resilience and tenacity of their medical staff and I find the EU grossly lacking in support for their plight. But the Italian government won’t do its tax payers any favours by using the corona crisis as a pretext to bail out unproductive entities. The crisis has already kindled a new debate about the Euro bonds. Sorry, but I do not consider it wise to give consecutive Italian governments another credit card to play with.
Die had ik nog niet gehoord! Shows you just how much fun you can have messing up acronyms. Imagine the things you can come up with by poking fun at the Fed’s bailout aphabet soup. I believe Wolf listed a bunch of them in a recent article.
Maybe we should come up with a competition here: most inventive redefinition of one of the famed Federal Reserve’s bail out instruments wins a bunch of Weimar banknotes, Venezuelan Bolivars or a 100-trillion-dollar bill straight from Zimbabwe. Hope the joke wil not be on us in a few month’s time.
Cause if there is one government that in the last 20 years overspend than it is the Italians. Except that that is not true. In the last 20 years they had the smallest budget deficit if you exclude debt-repayment and interest. They didn’t do tricks like not forming a government so they couldn’t cut the budget
Clearly, as we get further into spring, the virus is getting tamed … obvious as all viruses in the same class have the same seasonality. Of course, the govt will claim it is all social distancing … it is called spring. The stock market already smells the possibility. But, the stock market never got very cheap. No deals in real estate … this was too quick. However, people will be wearing masks this summer because the virus will lurk but the transmission will be low. After the election, if no vaccine is available, the winter will bring this virus will be back. This is what I have been expecting …
But, the airlines have a special problem because the seats are so close that there will be some transmission during the summer. Likewise, bars and restaurants will continue to be a problem. Only the vaccine cures this one.
I work for a multinational with presence worldwide. As a corona side effect, we are getting used to telcos and as a matter of fact, getting now a real return on all the capital invested in it communications. There was so much expensive travelling (business fares, hotels…), not to count the time out of home far from family for things that can be done via telco very decently, and improving. I believe we will change after this regarding business travelling. On top of that, safety minded companies will act carefully before going back to business as usual before corona
Jim: airlines in China at the moment have no problems distancing passengers because the demand is only picking up slowly.
But it seems there are no new cases among the millions of migrant workers who rushed from their ancestral villages back to their workplaces in Shanghai and Shenzhen by air and rail. Yes, there will be a tail of new isolated cases and maybe a few clusters but it’s the same as with every infectious disease, from the plague to the common flu.
Some websites who saw an uptick in traffic by peddling doom and gloom are now peddling what I can only call outright lies on the matter: my brother (whose workplace re-opened today) rightly said that when this thing is over we’ll need to bring the media to task even before politicians, and it’s hard to argue with that. We can all start by blacklisting some websites. ;-)
Bar and restaurants are already set to re-open in Austria and Denmark in 4-5 weeks as part of the gradual “Fine now get back to work, peasants!” plans.
Goverments are losing the battle to keep people scared and locked at home: smart politicians who want to win elections have got the message. Dumb politicians who like to play Caligula are still threatening everybody with Hellfire. If we are ever allowed to vote again I predict a radical change in management in many countries.
Finally a word about the vaccine: one of the first things you learn as a chemist is that even well funded programs staffed with the best minds can fail. What if a satisfactory vaccine is never produced? What if the development phase lags and interest (and funding) wanes? 18 years later there still isn’t a satisfactory SARS-1 vaccine: as the disease died down coming up with a vaccine slipped more and more on the backburner. What’s the plan then?
Healthcare authorities here expect a tail of isolated cases and small clusters to last for several weeks or months: that’s why they want to build a “Post-emergency Covid-19 Center” by modifying an existing underutilized hospital.
If the disease is ever put under control it can then be dealt with by slightly enlarging existing centers for virulent diseases: according to them the chief possibility is that Covid-19 may become endemic/dormant in some areas, like bacterial meningitis is here.
As every conqueror learned fear and hope are the two most powerful weapons in the human arsenal.
It is logical that the SARS-1 vaccine was not fully licensed because it is unlikely that SARS-1 will return. It is much more likely that a SARS alike virus will pop up than SARS-1
There is ZERO evidence that warmer weather has any effect on this so-called “ Covid 19
Any effect are strong words. Warm weather and sunshine absolutely have an effect but it is not known if that is enough for a sub 1 infection rate.
About 20 years ago, during the upteenth Alitalia crisis, I was discussing with fellow students from Germany what price Italy should sell our national carrier for. I said that a dinner for two at McDonald’s would probably be enough, plus some change for the Ronald McDonald foundation.
It is incredible and disheartening that Alitalia is being bailed out once again, and with the excuse of a humanitarian emergency at that. Since its founding in 1946, Alitalia has turned a profit only twice, in 1987 and 1998.
It has a monopoly on the Milan-Rome route, which is accordingly the most profitable route in the world. Which means that passengers are getting screwed each time they fly between the two cities.
Just shut down that whole circus and use the money for better purposes.
Milan-Rome is 3 hours by train. Why would anybody take a plane? Especially if the airport is not exactly in the city center. Doubt plane is really faster
At least the Italians did once more prove the old saying about why waste a good crisis, renationalizing Alitalia.
1) Bill Gates set a trap. If the gov will shutdown the country
for 30 days, Adam Shift impeach.
2) A negative feedback loop will slowdown the virus
3) When Wuhan erupt, give it a negative pulse, to retard osc. The first one is the largest, followed by smaller and lower waves.
4) Wuhan will hit us for a while until it will lose its pulse.
5) Wuhan have no boundary. Its China new “silk road”.
6) If Wuhan strike US #1 & #2 tops, number #3 takeover the world.
In a war, the president and his vp should keep social distancing,
otherwise the invisible enemy can suddenly strike both !!
Those clowns following Boris Johnson’s example would be the best possible thing to happen for American leadership. They are walking vacuums of leadership.
People keep calling this situation a ‘war’, but it’s really, really not, and doing so presents a scary picture of the levels to which militarism and authoritarian though have permeated our culture. Besides, if it is, then it doesn’t look good for the US. The ‘enemy’ is capable of moving undetected via virtually any channel. The government is so divided and confused that it can barely mount a cohesive defense. And the first act of the central authority was to act like Monty Python’s black knight and declare the initial infection a ‘flesh wound’. As with reality, and to extend the medieval metaphor, that ‘flesh wound’ is turning to be awfully persistent…
Small window to share about how covid is affecting my vast world wide financial empire…
Finished renovating a downstairs bathroom about 2 months ago after tenant of 2 years moved to Oregon, so as to re-rent this nicely done (all floors tiled, fully renovated basement, laundry room, everything but a stove with good full windows facing south) one bedroom / Livingroom/den / bath. Not a separate unit but more privacy than a shared apartment. Priced at $800/month it’s generally considered a very good deal.
Many wanted it. Narrowed it down to 2.
1st prospect fit my desired profile perfectly, a kid out of college living with parents working at W.B. Mason corporate office, downtown Brockton, very close to my house. He ordered his first bank checks to pay for it as I only accept cash or checks (I declined veno or paypal payments as I don’t want this income traceable so to speak and I’ve had my paypal frozen by paypal demanding I give them tax reporting info for something as minor as selling blu ray’s I choose not to keep, on ebay). Week later he delayed, explaining better to stay in country-side-esk Plympton, Ma than Brockton because virus.
I called 2nd acceptable prospect. He too put moving on hold, as his landlord delayed selling his place.
1st Prospect called, saying he’s going crazy self isolating with his family and would like to move in. He shared that he’s been furloughed by WB Mason but has savings and unemployment. Later he asked if I’d accept $500/month for several months then $800 after that. I agreed. Still later he said his unemployment amount does not reflect the full recent federal funding amount, and needs to resolve that before setting move in date.
Other prospects include a candidate working for a call center and must move immediately because he needs a place with a room he can talk on phone all day. He did not meet other things I look for like having a car as I live in a suburban setting and feel it is needed.
Another prospect works for a blind school, makes $24/k/yr, and is currently working from home. His sister initiated our meeting, and will help him afford rent if he can’t.
Another prospect is on disability due to Lupus, but is allowed to work 22hrs a U-Hual (and essential service) and currently pays $175/week.
Summary: First 2 most favored applicants, lives interrupted by covid.
Other applicants appeared as a result of covid.
Other applicants apparently unaffected.
I have noticed significant decline but not total stop, in responses to my adds, since the 1st prospect informed my he would delay due to covid.
1) Social distancing will exist between nations and continents. Its
a new world order.
2) On Feb 6 2018 US30 DOW Futures hit a low @ 23,088 within x7 days.
3) it was the sharpest plunge @ 1.9%/ day ever.
4) It was faster than the current Feb/ Mar, or 1987 collapse.
5) The DOW bounced back up like a ping pong ball, on Feb 7 to 25,234. That’s a resistance line.
6) In the cash market SPX Feb 7 2018(H) hit 2727.
7) This morning the DOW Futures breached Feb 6 2018(L) support
8) S&P500 Futures bounced above Feb 7 2018(H) @ 2727.
9) Volatility is back. Dr. Madlebrot create chaos from heaven.
10) US30 DOW futures retrace about 60% of wave 3.
11) Today highs is either an upthrust that can send the markets
down, or continuation of the DOW DOW higher.
Other day, a commentor mentioned that $AAL shares were $0.50 back in 2009 but now $15. I hope when the crash happens, it would be a good buying opportunity for long term investors.
As usually for retirement investment like 401K, it will be time to jump back to $VTI or $VOO.
What are your picks?
American Airlines, just like Delta and to a lesser extent United, still haven’t solved the “continuation of service” conundrum: under terms of the CARES Act airlines are required to guarantee a minimal number of flights between destinations they served before the crisis. If airlines refuse to comply they may be cut off from those juicy $60 billion the CARES Act has set aside from them, partially or even altogether if they drag their feet too much.
The longer AA drags their feet, the more money they risk losing before the terms of the CARES Act run out and US airlines enter the “recovery phase” where there will be far less cash available. Of the Three Big Sisters AA is without a doubt the one in the weakest financial position and I have no doubt United wouldn’t mind seeing their partners/rivals brought down a notch or two. This structural weakness, coupled with I can only call an unsatisfactory deal signed with Boeing over the 737MAX groundings (SouthWest is negotiating far better terms), is something the stock market will have to take into account when we will return to normal.
CARES is only thru 9/30/20, if the DOT extends, the DOT must extend by Aug 1st.
The requirement is to maintain service to a city, not to maintain service on a route.
If an airline serves multiple airports in a city, it can consolidate to a single one.
If an airline served a city at least 5 days per week, then it will be required to serve that city at least once a day for 5 days per week.
If an airline served a city less than 5 days per week, then it will be required to serve that city at least once a day for one day per week.
I just wanted to add that today Wuhan airport is once again open for business: the first flight to take off belonged to China Eastern (State-owned) and the first to land to Xiamen Air (a joint venture between State-owned China Southern and the Province of Xiamen). That’s kind of a big official seal of approval.
This officially marks the full reopening of the domestic Chinese market: it will take several months for things to get back to normal, for no other reason many Chinese airlines depend on foreign pilots who are now stuck in their home countries, but confidence is very high.
Whether this was a turning point or just a big speed bump in the road however remains to be seen.