Alitalia, Lufthansa, Condor, Norwegian, Other European Airlines Try to Survive, But it Gets Complicated

It’s all about money, but whose money?

By MC01, a frequent commenter on WOLF STREET:

As the dust starts to settle and air travel finally resumes, the European Commission (EC) is starting to look into the stream of public funds and taxpayer-backed loans that is pouring into European airlines’ coffers to see what can be considered a true aid to get through the Covid-19 crisis and what is not. And according to Italian media, the EC already has its sights set firmly on Alitalia.


Alitalia has been in administration since May 2017, when the Etihad partnership/takeover collapsed. This is already exceptional as common practice in Italian bankruptcy law is to liquidate a company after one year in administration at most, if a new buyer cannot be found or a recovery plan agreed upon.

On March 18, 2020, taking advantage of the general chaos due to the healthcare crisis, the Italian government decided to nationalize Alitalia, an operation which was supposed to cost €600 million right away (mostly to pay off existing creditors and exit administration) and €3 billion down the road.

EC investigators have highlighted a long series of inconsistencies besides the obvious political implications of pouring so much money into a company with decades of financial losses while the Italian social security agency (INPS) is struggling to pay unemployment benefits.

Among the primary issues are the exact nature of two still ongoing “bridge loans” for a total of €1.3 billion, and the extraordinarily long time spent in administration without any serious attempt to sell the company or to restructure it to make it profitable.

The EC argues the Italian government has engaged in a “sleight of hand,” using the crisis to do something that had long been planned. The EC has given the Italian government until September 1 to provide a new recovery plan, as the present one cannot and will not be approved.

LEVEL Europe.

One airline which won’t be able to access State funding is LEVEL Europe, which filed for insolvency in Vienna and suspended all operations on June 18.

LEVEL Europe was an Austrian-registered subsidiary of IAG, the group whose brands include among others British Airways, Iberia, Vueling and Aer Lingus. It operated in the ultra-competitive European low-cost market, initially from Vienna to a series of destinations in Western Europe but later extending operations to Amsterdam.

However, the airline proved unable to compete with low-cost heavyweights EasyJet and Ryanair and always struggled financially. IAG took the obvious decision to cut their losses at a time when saving money has become absolutely paramount.


And surprisingly, another airline which may not access State funding is Lufthansa. After announcing the group will attempt to lay off up to 22,000 employees while agreeing to a €9-billion “rescue package,” the Frankfurt-based group just discovered a major problem: the new main shareholder.

During the Covid-19 crisis, Munich-based billionaire Heinz Hermann Thiele increased his already conspicuous holdings of Lufthansa shares to 15%, making him the first shareholder. Thiele, who cut his teeth as a corporate patent lawyer before entering in the Vorstände (executive boards) of several transport technology companies, has been extremely vocal in his criticism of the “rescue package” negotiated by Lufthansa CEO Carsten Spohr.

While the German government at first maintained Thiele was “just bluffing,” they later had to admit he carries more than enough weight in the Lufthansa board to scuttle the “rescue package” and possibly send the whole group into administration during the crucial meeting to be held on June 25, should he choose to do so.

As it always happens with Lufthansa, politics have fully taken over now. While Thiele has long been a vocal critic of the Merkel Cabinet, a political compromise will be found that will allow Thiele to get what he wants and the German government to declare victory and move on.

A solution is absolutely necessary at the moment as the whole Lufthansa group (Lufthansa, Swiss, Brussels Airlines, Dolomiti, etc.) is ramping up operations on flights to destinations in Europe and the Middle East, with the number of flights further increasing starting July 1. As the saying goes failure is not an option.

Condor, again.

Using the force majeure clause in the preliminary agreement, the Polish Aviation Group (PGL) has already decided they will scuttle the deal to purchase German leisure airline Condor.

In January, PGL – a state-owned group which wholly controls Polish flag carrier LOT and has a 49% stake in Nordica, the Estonian flag carrier – announced a plan to buy Condor for about €300 million. Condor had previously been part of the ill-fated Thomas Cook Group and narrowly escaped bankruptcy thanks to a €380 million bridge loan from the German state-owned development bank KfW.

With PGL now out of the picture, Condor will need more state-backed money to survive: This is presently estimated at around €200 million. It’s likely the German government will attempt to “dump” Condor upon either Lufthansa or TUI Group. But in the present climate both groups are very likely to resist vigorously, unless Condor comes with a hefty financial support package.

In the meantime, Condor is laying off 15-25% of its staff to save money, a decision that was long overdue: Condor had become bloated under Thomas Cook ownership, and during the early phase of the special administration there were signs the trend was continuing, a baffling situation considering the airline’s precarious financial situation.

Norwegian Air Shuttle.

Speaking of “precarious financial situation,” no report would be complete without Norwegian Air Shuttle. NAS was already in serious financial troubles before the Covid-19 crisis due to its massive debt-fueled growth binge that didn’t quite work out as expected.

On May 20, the company announced the completion of a NOK13 billion ($1.28 billion) recapitalization program which included the issuance of 30 million new shares at NOK1 apiece, compared to the closing price the day before of NOK4.4.

In one of those now puzzlingly common moments, the just devalued NAS stocks immediately shot into the stratosphere, giving the company an all-time high market capitalization of NOK 13.73 billion at a time when just 7 of its 120 aircraft were flying.

Fund managers who had subscribed the new shares at NOK1 quickly sold them at NOK2.2 realizing a 120% gain in mere hours. Move along Tesla.

Part of the recapitalization was a required debt-for-equity swap, where creditors had to exchange some of their claims for shares. Aircraft lessors ended up with the lion’s share: AerCap with 15.9%; and BOC Aviation (a Singapore-registered subsidiary of the state-owned Bank of China) with 12.67%.

These lessors aren’t happy about this agreement, but the alternative was a difficult bankruptcy involving a company with a convoluted corporate structure, heavy debts, and little hard assets, all of them already used as collateral.

The new owners have also forced a drastic change of plans. NAS originally expected to fly just 7 aircraft into 2022, an incomprehensible choice at a time when their rivals were ramping up operations and especially given that European legislators have allowed airlines a lot of leeway on on-board measures to prevent the spread of disease.

NAS has now pulled a further 20 737-800 from storage which will be used to serve destinations in Scandinavia and Britain, with more to come.

While the recovery in Europe is now underway, the extent of the medium and long-term damage to air travel remains to be seen, especially to long-range destinations.

The Italian government has announced it will drop almost all quarantine requirements and restrictions for travelers coming from abroad on July 1. It’s likely all Schengen Area governments will follow suit over the following 45 days. However, it remains to be seen exactly how much this decision will affect air travel, especially long-range flights from the Americas and Asia. By MC01, a frequent commenter, for WOLF STREET

Delta issued the mother of all revenue-warnings. Its disclosure confirms Buffett’s decision to dump his airlines in mid-crash. Read… The Chilling Things Delta Said about the Airline Business, the 90% Collapse in Q2 Revenues, and Why Some Demand Destruction May Be “Permanent”

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  75 comments for “Alitalia, Lufthansa, Condor, Norwegian, Other European Airlines Try to Survive, But it Gets Complicated

  1. antoine says:

    hello Wolf
    just to tell you than people arriving in france have no control, autority just check temperature ;)

    • MC01 authored this article. In regards to your comment, could you elaborate? What control SHOULD people arriving in france have?

      • MC01 says:

        It depends from where you are arriving.
        For example if you boarded a flight in Rome and landed in Paris there are no controls: all restriction on travel between France and Italy were dropped two weeks ago already.
        There should still be quarantines for people arriving from several destinations (such as India) but apparently these are very spottily enforced, if at all.

        Temperature checks are a complete joke. Do you want to know what my body temperature is according to these scanners? It fluctuates between 34.6 and 33.1°C. As my doctor joked “You are still technically dead”. To get a reading of 37.5°C one should be literally burning with fever.
        And somebody made a fortune selling those crummy scanners, it only cost him a small “contribution” to the OMS/WHO that promptly included temperature checks in their guidelines. Why we are still forced to trust that brood of vipers is the best argument for anarchy.

        • LoneCoyote says:

          I can confirm that temperature checks are useless. In the week or so since they put them in at my office building I’ve never had a temperature above 95. One of my coworkers came in at 90 one day (told him our boss would be traumatized when he finds him frozen to death in his cube in the middle of summer). Then there’s the guy who couldn’t get back in after lunch because after going out in the sun, the scanners said he had a 105 fever.

        • Missouri Jon says:

          Absolutely correct about nonsense temperature readings in the Midwest too. My brother-in-law checked into Barnes-Jewish, a world renowned cancer treatment hospital, and had his temp checked five times. He got a look at one reading of 92 degrees F. He told the security guard who administered it that it was way off, he’d be comatose, and the guard dismissed it saying, “It’s under 100, that’s all that matters.”

          Indeed, for legal CYA and public perception, truth is irrelevant. Ugh. People who refuse to acknowledge that many “facts” about Covid19 are poltically tainted – one way or the other – are being naive or disingenuous.

          There were three other stories I got about bad temperature readings, all from those forehead scanners. One guy in Kentucky at a construction site got a look at the temperature log for the day – the highest was 86 degrees F! A riverboat captain I know had the lowest I heard about, however, at 75 degrees F.

          “Why we are still forced to trust that brood of vipers is the best argument for anarchy.”

          Wonderful phrasing, I just love it. I missed your articles, glad to see you are still at it. Your writings about the global transportation industry have been making the rounds here.

          Btw, a friend who worked as a buyer at Boeing in the military division in St. Louis said that they’re cutting back staff (though not as hard as in the commercial division). So far it’s mostly incentivized attrition, she took a voluntary buyout program where they gave her a lump sum in return for which she signed a document stating she wouldn’t seek employment there for so many years.

          She told me many horror stories about the bureaucracy at that place, ones that make the aforementioned thermometer checkpoints look like child’s play. I’m not surprised she left.

    • BuySome says:

      Just got a temp. check in order to get in for a vaccination that was pre-scheduled before Covid hit. Could have turned and walked and chanced what nature has in store instead. It’s not like they’re checking your credit score and refusing entry if your name ain’t Morgan! It’s medical protection. No aliens from Mars tagging you for dinner here. Don’t like it, then don’t travel and put everyone else at risk. Jeeez!

  2. 2banana says:

    But these fools still let them borrow their money…cause chasing yields was cool.

    “These lessors aren’t happy about this agreement, but the alternative was a difficult bankruptcy involving a company with a convoluted corporate structure, heavy debts, and little hard assets, all of them already used as collateral.”

  3. Julian says:

    Why should they get any money? There should not be a cent, or a euro, provided to any of these airlines by the public.

    The airlines should be able to trade through these conditions.

    It’s pretty disgusting and emblematic of the destruction of capitalism.

    • Don’t be unreasonable! These massive, bloated corporations need LOTS of money or else they’ll be forced to adapt to the current economic situation! Look what happened to the poor dinosaurs! And who wouldn’t like to have a few of those around right now!?

    • MC01 says:

      I agree taxpayers should not be forced to spend a penny.
      The money should come from the pockets of politicians, their “scientific” advisors, OMS/WHO mandarins, Chinese party officials… even if this had originally been a healthcare crisis it has long morphed into a political crisis, 100% manmade.
      Somebody should answer for this because the present “stuff just happens” attitude is like throwing gasoline on a raging fire.

    • John Henderson says:

      Yes it is disgusting, but the decision makers will be looking for well paid jobs in the future.just saying.

    • char says:

      Airlines are a public transportation company. And like all public transport companies they are value creators for society/government, not because of the profit they generate or the employment numbers but because of the services they deliver and as such the government will support them even more than the massive subsidies they normally get. And i think that it is wise,

  4. Dion M. Zacarias says:

    Why would anyone voluntarily submit themselves to airport waiting lines, cavity searches at security, sardine-can accomodation next to the toilets in the flying tube and nonexistent service? Interrogation at immigration and customs on arrival, then a second wave pandemic is declared by the WHO soon after, marooning you in the foreign country where you can watch your credit card balance go to minus infinity.

    • Javert Chip says:

      Because taking an airplane is generally a whole lot faster than walking.

    • roddy6667 says:

      Air travel in Asia is not like flying in America. Security checks are fast and courteous. The flight crews on the planes are pleasant and professional. The airports are not the Third World abominations like JFK. Getting marooned in a foreign country would be a lot healthier and enjoyable than flying back to the States.

  5. Christoph Weise says:

    The capacities are likely way too high for the business in the next two years. It would be better to let the companies reorganise in insolvency proceedings and shrink. That would offload the burden to banks and leasing companies. But that exactly is prevented because it would stress the financial ecosystem and therefore the tax payers have to foot the bill.

    • Javert Chip says:

      New! IMPROVED solutions:

      o AlITALIA changes its name to WeWork Airlines (people rent seats for small amounts of time as the plane just so happens to go from point A to point B.

      o Lufthansa changes its name to Tesla Airlines. Lufthansa needs to loosen up a little (actually, quite a lot) – maybe they cold open up a flamethrower firing range.

      o Condor changes its name to Uber FLYS and sets spectacular records for both money raised and money lost.

      o Norwegian Air Shuttle: Norway just needs to suck it up & deficit fund this enterprise. Its premium economy seating & food for returning to US from Europe is terrific.

      I’m just tying to help.

      • MCH says:


        Yup, dart guns, not flame throwers…. the latter can’t be used in air. Dart guns though, you can use those on the A380s.

        Extra perk is for the business class pax to get tranq darts.

        • roddy6667 says:

          We flew on an A380 from Seoul to JFK last time. It made a 13 1/2 hour flight almost pleasant. Lots of room to walk around, socialize, stretch your legs.

        • MCH says:

          I’ve flown on the A380 only once, and it was Singapore to HK. It was a nice ride, thoroughly enjoyable.

          Although I think that was more because it was Singapore than because it was the A380.

  6. Cobalt Programmer says:

    Like HTZ pumped by Robinhood traders, why not these airlines issue some new shares (also -ve yield bonds), go to the retail market and raise money from day traders. Its margin trading anyway.
    May be reduce spaces between chairs. I always wondered why mother nature did not make every man 6 foot tall. Because, the natural selection by airlines. Short guys like me feel OK if not squeezed between two big people. The tall guys feel awkward. What about standing option. No seats but cheaper price. Yet another way is mergers, join hands and make fliers life miserable.

    • MCH says:

      The argument there is at least those airlines aren’t going bankrupt, yet. So, raising funds from the market makes sense.

      Or as Wolf might say, these bailouts are yet another manifestation of refusal to let the natural economic cycle of bankruptcy and market forces to work things out and we end up with a bunch of zombie companies.

      Well, we are certainly making great progress to the world of crony capitalism. Which in my opinion is a lot like Soviet style communism.

      • MiTurn says:

        And it will probably have the same outcome. But getting to that point might be…eventful.

      • Javert Chip says:

        About the only thing Soviet communism tended to have a lot of was long lines & empty food shelves.

        You owe it to yourself to look at a YouTube of a Soviet “supermarket”. I promise you, crony capitalism is way better.

        • roddy6667 says:

          Crony capitalism is not competing with Soviet Communism. The Soviet Union fell decades ago. Now crony capitalism competes with state sponsored capitalism. Guess which one benefits primarily the top 5% and which one is more democratic.

        • Javert Chip says:


          There is no such thing a “state capitalism”; the definition of capitalism is individuals (not the state) are responsible for the consequences of investment risk & reward (for the record, when the state is responsible, it’s called socialism).

          I’ll concede that what you may have meant by the awkward name “state capitalism” is a government that allows the private economy to function as a capitalist system

        • MCH says:


          Don’t have to see the videos, having lived a version of it (not the Soviet one) myself, albeit as a kid, I know the pain involved.

          The problem though is that in both systems, (Soviet style communism or crony capitalism) corruption become the primary component of such a system. People’s lives are better as a whole. You just have to compare the results of 1980s China to 2020s China to see the improvements. But that corruption will still rot the economy over time, the only question is how fast.

        • char says:


          State owned works really good but only for a few decades. After which it hits a plateau.
          Mix economy works almost as good but does not experiences the plateau of state owned economies.
          Pure private sector economies have low growth rates and high market failures (I would call it corruption if it hadn’t a definition problem)

          US has historically been a mixed economy but it is moving to a more pure private economy which coincides with lower growth and most of that growth in the still mixed sectors.


          USSR also grew between 1925 and 1940 or the two decades after WWII

    • MC01 says:

      Norwegian Air Shuttle (NAS) did just that: re-read the last chapter for the full horror story. ;-)

  7. MCH says:

    This is one of those history changing events in an industry that is going to define things for a generation I think. At least on par with 9/11, until people has forgotten.

    I wonder what the airline industry will look like in five years, and it will be curious to see how permanent the demand shift is. Business travel will certainly change, first due to economic conditions, and also due to shifts to online meetings, that will be a change that may stick for a good while.

    Then there is leisure travel. I am sure it will be near term challenge both due to fears and uncertainty associated with C19 and personal economies as a whole.

    The airlines are making the right calculations, Storing stuff that isn’t going to be needed, but how soon will those stores components be sold off… after all, what is a service industry without the need for the service. No matter how much governments might want to bail it out or want travel to return.

    The follow on effect to the rest of the economy, especially tourism will be bad for a while.

    • Javert Chip says:

      Bean counters (I am one as a retired CFO) always want to see better justification & control of T&E expense (so does the IRS)…it’s pathetically easy to abuse.

      However, having said that, actually engaging people face-to-face has a powerful customer impact that definitely doesn’t come thru with a techy ZOOM meeting on a small screen. Perhaps once the relationship is firmly established, substituting occasional on-line meetings is probably ok.

      The clunkiness of on-line meetings (aside from the inevitable technical frustrations) result from the formal “meeting” only conveying about 51% (my guess) of the intended message. The remaining 49% can generally only be communicated informally (casual conversation, drop-by office visits, bar talk, manners at the dinner table, rigor with which they follow the rules of golf, etc). Some of this may sound trivial, but deciding if you can “trust” a stranger has serious business consequences.

      Covid-19 on-line meetings have been forced on business, and people adapted to the unique experience as best they could; most would qualify this as something you endure, as opposed to a quality experience.

      Things never stay (or return to) the “way they were”, but, in 1-2 years, I suspect business travel will be substantially the same. We’ll soon find out.

      • MCH says:

        I agree. This is true not only between vendors and customers, but also internally. Before C19, I made it a point to drive into the office two hours away every few weeks, lots of benefits talking to people direct. This is unmistakable. None of the items you listed are trivial, they are fundamental to relationship building, both internal and external. But I am curious to see if it will go back to normal that fast.

        I hope it does. Because I can’t stand this cooped up at home all day business. Zoom meetings are literally the worst, but once the bean counters see the savings associated, it’s easy to justify some of this stuff on paper. After all, if the T&E dropped by 100%, and your business only dropped by 20%, well, you know where I’m going with that.

        The same is true for this movement to work from home. It can be totally distracting if you have more than one person doing it at a time.

  8. Leslie says:

    I have credits with TAP Air, EasyJet, Lufthansa from March flights. EasyJet just refunded me yesterday. Tap Air went into re-use as a voucher for another member of the family, flying Tuesday. Lufthansa, after 3 months no refund and no real word for intercontinental big figure amount. I calculated from the beginning I would not see any $$ from any of these airlines. Plsd to have received EasyJet refund. Let’s wait to see if the re-allocated TAP Air voucher money was useful, ie., does the flight take off? (out of Lisbon) Had to buy another Lufthansa flight (intracontinental) departure Wednesday. So, does that flight take off? or just more $$$ into the abyss… VERY interesting to know that June 25 is a big date for Lufthansa. The day after the flight path this week coming.

  9. lisa2020 says:

    You do know that IAG is “owned” by QTAR? Qtar, is the wealthiest nation globally. Do you really know what is going on?

    “Qatar Airways is a minority shareholder in IAG, having first invested in 2015, buying 9.99% of the company. Qatar has steadily increased its shareholding since then, and held 25.1% of the shares as at February 2020.[49]” Wikipedia.

    I’m sure by now it’s over 50 percent. If no one doesn’t know yet where any and every bit of any kind of “value assets”, and debt sheltering are maneuvering from, that’s a clue.

    • Wolf Richter says:


      “I’m sure by now it’s over 50 percent.”

      Well, no. On Feb 18, 2020, Qatar invested another $600 million in IAG and increased its stake in IAG to a total of 25.1%. Since then, the price of these shares — including the value of Qater’s 25.1% stake — has collapsed by 58%. Impeccable timing. ?

    • MC01 says:

      The Government of Qatar has some problems with their investments lately.
      Besides the collapse of IAG “shares” (technically they are CDI) highlighted by Wolf before they also suffered:

      A yet-to-be-quantified writedown due to the bankruptcy of the LATAM Group. The Qatar share was 10% and they had invested something between $800 million and 41 billion in the South American aviation group.

      The ongoing development of the massive North Field East Project (NFE) which will increase Qatar’s yearly LNG production from 77 million tonnes to 110 in 2025. A further expansion, the North Field South Project (NFS), will bring yearly capacity to 126 million tonnes in 2027.

      The latter in particular is extremely important as LNG prices have never recovered from the 2014 energy burst and are lower than they were a decade ago (not inflation adjusted), while at the same time all of Qatar’s competitors (Australia, Indonesia, the US, Algeria etc) have invested heavily in liquefaction trains and terminals.

      Qatar needs high energy prices to keep on financing pretty much everything else: they are in better position than the UAE and especially Saudi Arabia as they aren’t wasting ridiculous sums of money in useless vanity projects such as steel mills in a word awash in heavily subsidized steel, but all of the Gulf’s energy-dependent countries face the fiscal day of reckoning over the next decade.

    • char says:

      Flag carriers need a certain percentage of local ownership and Qatar owning 50% is to much.

  10. KGC says:

    Qatar, while nice (and yes, I have been there), is nowhere near the “wealthiest Nation in the world”. It’s GDP (per capita) is less than half of that of Luxembourg. It raw GDP it ranks 48th, way behind, Israel, Hong Kong, or Singapore.

    • MonkeyBusiness says:

      Maybe, but Luxembourg, Singapore and Hong Kong are all capitals of funny money, so once globalization goes into reverse, their GDP will tumble fast.

      But then again, America is the the country with the highest GDP in the world, but you can’t tell that from its crumbling infrastructure, number of homeless people in big cities, etc.

      • fajensen says:

        I think that *if* globalisation reverses, “the funny money incumbents” will do better than they do now, because they did pretty well before globalisation and competition happened.

        It’s the new kids like Dubai and Delaware that will take it in the shorts.

        Hong Kong is done for because its going back to China, behind the currency exchange wall.

        • char says:

          This makes it sound like Beijing is puling HK behind the Yuan curtain while it is Washington that is pushing it out of the dollar zone.

    • Cas127 says:

      Qatar is plenty wealthy per capita.

      And I don’t think anybody was thinking about national GDP…nobody is under the illusion that tiny Qatar compares with China, US, Japan, etc.

      • David G LA says:

        Maybe because the GDP per capita amount does not include all of the slave, oops “guest,” workers.

  11. Olivier says:

    @MC01 What about Air France-KLM?

    • MC01 says:

      It got State-backed loans for about €13 billion.
      And I am actually surprised at how quickly they are resuming service: even Transavia (the low cost subsidiary) re-started services last week.

      • CRV says:

        And i’m happy with that, because now i get my money back instead of a voucher. But that’s just personal.

  12. FLEAHEAD 1 says:

    Does anybody out there think Boeing can survive in this environment wait for cancelled orders after rich are bailed out taxpayers hold the bag again middle and lower class fed up hey rich guys don’t fotget too take off silk underwear history repeats

    • Sit23 says:

      Defence contracts.

    • MC01 says:

      Boeing won’t go bust, but there’s literally no explanation for its obscene market capitalization: it stood a $105 billion at the close on Friday. To put it into contest in January 2017, when the good times were still rolling and the 737MAX was still in the certification phase (hence no problems) Boeing market cap stood at $97 billion.

      The chief problem for Boeing right now is the complete lack of leadership. Airbus has just announced they are scrapping the new freighter that was to replace the extremely disappointing (as far as sales go) A330F: this leaves the new-build freighter market completely in Boeing’s hands. And what is Boeing planning? A re-engined 767! You honestly cannot make up stuff like this.
      Gulf carriers have been asking for a 777X freighter for over a year now and Asian customers have been very vocal about a 737-900ER freighter conversion since Boeing started working on the 737NG freighter program. They got absolutely nothing so far. The promised 777-200/300ER freighter conversion has never materialized: Boeing hasn’t even tried to defend their inexcusable laziness.
      And this is just an example of the complete leadership failure at Boeing: as much as I detest Ellon Musk with every fiber of my tightly thermoregulated body at least he provides leadership to Tesla and other companies such as Space X. You know who is boss and what he wants.
      The bosses at Boeing seem to spend their time going from one corporate meeting to another without deciding anything bar perhaps what having for dinner.

      That doesn’t sound like a company worth over $100 billion to me.

  13. MiTurn says:


    Great article; very informative — thanks.

    I have a question. These airlines are being to ramp up to get back doing what airlines do. But are they ‘gambling’ on having customers (people who are determined to return to air travel), or are they relying on evidence that the demand for seats is there?

    • MCH says:

      I hope that for a lot of airline employees they are considering alternatives at this point even in this tough market.

      One thing for sure is that come October 1st, the airlines are going to cut staff, no amount of bailout bucks is going to support an industry that will have reduced demand like this.

    • MC01 says:

      Several airlines (Ryanair, KLM etc) opened online bookings in May already and used it to gauge how much appetite there was for their services.
      Others worked in parallel with tourism boards to gauge demand.

      So far so good as the saying goes: in fact demand throughout Europe is better than originally envisioned, leading to airlines ramping up service. Air France expects to be back at 80% of the pre-crisis network by the end of the Summer, albeit long range flights (Paris-Bengaluru to say one) will run on a reduced schedule until there’s more clarity on long-range flights.

  14. raxadian says:

    [The Italian government has announced it will drop almost all quarantine requirements and restrictions for travelers coming from abroad on July 1]

    This won’t end well.

  15. Ceramic Fists says:

    At least none of them have over 120 monster Airbus 380s on their books like Emirates. $445 m apiece purchase price and $26-29000 running costs per hour. Emirates has almost as many A380s as all the other airlines of the world combined.

    • Sit23 says:

      Well. There is always someone worse off than ourselves.

    • MC01 says:

      Emirates was already shifting away from the A380 before the Covid-19 crisis started: last year Tim Clark clearly stated the future “flagship aircraft” will be the Boeing 777X for which Emirates already has 115 firm orders. Emirates has joined Qatar Airways in pushing Boeing into developing a freighter variant of the 777X and they had better look into that idea instead of wasting more time with a re-engined 767, an idea so stupid it doesn’t even deserve commenting.
      But the backbone of the Emirates fleet is and will remain the 777-300ER, at least until 2023 when the first 787 and A350 should be delivered.

      The big problem with the A380 is that, besides the changes in aircraft design which were already ongoing when the first entered service, it becomes a prohibitively expensive aircraft to operate as it ages.
      To give an example Emirates discovered, much to their horror, the A380 landing gear cannot be “rebuilt”, a routine operation which is carried out at around 50% of the aircraft airframe lifespan. It needs to be completely replaced. The cost of this operation is a cool $25 million, and I strongly suspect Airbus is eating some losses on it to keep customers from openly rioting. The landing gear itself is designed and manufactured by Safran (formerly Goodrich) and it’s a marvel of engineering, but it needs to take 370-380 tons of aircraft, passengers, fuel etc on landing, day in day out. It just wears out well beyond repair.

      Emirates is sending their oldest airframes for disposal in an undisclosed location (educated guess: Tarbes, where the Singapore and Air France A380 are being disposed of): this was a decision the airline had apparently already taken in 2018.

      There are presently three brand new Emirates A380 in Hamburg where they are being outfitted with interiors. These aircraft will be delivered.
      But last week the components for the final five Emirates A380 were delivered in Toulouse. The Dubai-based company doesn’t want these five aircraft anymore and would like to just have the components scrapped. Airbus needs to keep the production lines working and has threatened a lawsuit. This needs to be resolved quickly because (according to my sources) assembly is scheduled to start next week.

      On top of this the final A380 for ANA of Japan (bought exclusively to help Japanese companies win a supply contract with Airbus) is in Toulouse awaiting delivery. The Japanese don’t really want it anymore but for now the aircraft is merely “in storage”. The French and Japanese governments are working on this, but it will take time.

  16. WES says:

    Getting Covid-19 is now the new normal!

    Little Hyawatha went went travelling.

    Little Hyawatha is now wondering the Happy Hunting Grounds!

    • char says:

      In the US. maybe Getting Covid in Europe* is not considered normal.

      *) outside underdeveloped countries like Sweden and England

    • BuySome says:

      Running bear and Little white dove already have it booked.

  17. char says:

    What about high speed rail? There is a push to have better rail connections and rail normally out competes flying

    • roddy6667 says:


    • MCH says:

      you mean like the high speed rail in CA?

      In Europe they already have pretty good train service, as long as it’s not routed through France during a strike. But it doesn’t change the proximity situation much.

      • BuySome says:

        “If the road you chose brought you to this point, what good was it?” or Just because you can do something doesn’t mean you should do it. Is there a point at which “Faster, faster, it’s okay…I’ve just got to get away…” just becomes a nice song but a diminishing return lifestyle. Oh, yeah..when Covid & Cousins puts the brakes on it! Let ’em fail. Then reconsider how much is needed and how much can be altered.

      • roddy6667 says:

        Not quite. More like “Marge vs. The Monorail”.

      • char says:

        There is a real push for more high speed rail in Europe. It is not like in the US. And the core of Europe, a 500 mile thick line between Rotterdam and Venice has a large part of the population of the EU which could be serviced for intern travel by rail but because of borders isn’t. Changing that does not cost a lot of concrete but a lot of meetings. And they are pushing for those meetings

  18. Willy Winky says:

    Food for Thought….

    (BBG Jan 2020)Peak Permian Is Approaching Faster Than You Think

    The region that’s driving U.S. oil growth is already showing signs of peaking, making the goal of U.S. energy independence as elusive as ever.


    If the carnage that took place in the U.S. shale oil patch during the first quarter of 2020 is any indication of the financial health of the industry, just wait until the second-quarter results are released. Yes, there’s going to be serious BLOODSHED in the shale industry come early August.

    Shale was roughly 10% of global supply last year… shale wells have never made money … shale wells deplete rapidly…. the sweet spots would have all been tapped already…. was the end nigh?

    It was looking like we had a supply vs demand mismatch brewing… in 2007 oil spiked to $147 a barrel…. then shale was ramped up and we still had historically high prices but there was at least stability (with help from the central banks in the form of a range of stimulus to allow the global economy to gulp this oil without throwing up).

    Assume shale was about to hit a production wall — or maybe a financing wall as punters tired of chasing ephemeral profits — I’ll go with production wall though because this is too important for the CBs not to step in with cash….

    If shale (the last frontier… the dregs….) was about to tank … what would the options be?

    1. Watch the price of oil scream past $147 causing massive inflation and obliterate the global economy? (Note there would be no recovery because we’d just run right back into the same problem smashing us down again)

    2. Purposely crash demand for oil by locking the world down using a virus as the excuse — and ‘ration’ the remaining stocks of oil that are available and affordable to produce?

    Frivolous air travel would be high on the list to end….

    Obviously rationing and locking down are catastrophic policies — how do you offset them? MMT…. Universal Basic Income (+ mortgage and loan holidays)….

    It’s all coming to together now….

    • Wolf Richter says:

      $147 oil would be absolutely THE BEST THING ever for the entire EV industry. It would trigger a boom like you wouldn’t believe, now that everyone is building EVs.

    • char says:

      Air travel does not use a lot of oil. At least seen from total demand. What is more of a problem is that road transport is fast going electric . Which leads to a situation that kerosene is no longer a by-product but the main product which leads to higher cost of kerosene compared with gasoline or diesel.

  19. Quaas says:

    Airline jobs will be lost either way, with government aid or without. Let shareholders, bondholders, and lessors carry their lot without us, the taxpayers, footing the bill. Lots of people already have or will lose their jobs in this industry, let’s help them. New or restructured airlines will become the real competitors. Airlines which continue to carry huge debt loads will be uncompetitive. These debts will have to be written down in the future. Lufthansa’s board meeting this Thursday will likely result in a compromise. It’s pressure tactics by Heinz Hermann Thiele, who bought 15+% of the company during the COVID-19 crisis. He wants to extract more money from the government. He controls Knorr Bremse AG and Vossloh AG, major suppliers to the government-owned Bundesbahn and to municipal public transport authorities. It’s their main customer group, by a huge margin. The argument of the German government is (a) job preservation (won’t happen, Lufthansa already announced job cuts of 20.000 last week) and (b) to preserve Lufthansa’s worldwide stellar reputation. Ridiculous! I avoided Lufthansa for years. Overpriced and arrogant service. Name any airline that has any reputation to defend. I say this as a frequent flyer.

  20. Marc Mingels says:

    Prague Airport slowly starting to move on as 17 airlines have confirmed that they will resume connections to 55 destinations

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