“Daily Cash Burn” to Continue till Further Notice: US Air Travelers Still -65%, Ticket Prices -25%, a Toxic Mix. Delta Q3 Passenger Revenues -83%

Eight months into crisis, airlines are stuck in worst recovery ever.

By Wolf Richter for WOLF STREET.

US airlines are in the crappiest recovery ever. They’re getting hit in two ways: The number of passengers is still way down, seven months into the pandemic, or actually over eight months into it because for airlines it started at the end of January with flight bans; and on top of it, ticket prices have plunged — the toxic mix of crushed volume and crushed prices. In its third-quarter earnings report on Tuesday, Delta showed how that worked out.

Airlines’ passenger volume still crushed.

The number of passengers entering the security zones of US airports is still down 65% from the same time last year, according to TSA airport screenings. Normally, there is the summer peak in June, July, and early August, then passenger count drops in the weeks before Labor Day, and surges after Labor Day, as business travel picks up and people that don’t have kids in school go on vacation. But this year, business travel, including the entire conference and meeting sector, is still mostly dead and vacation travel is still thin, especially among the older people who might otherwise travel in the fall.

The chart shows TSA checkpoint screenings per day, as a seven-day moving average through October 13, in 2019 (black line) and in 2020 (red line):

When an industry has 65% less traffic than a year earlier, that’s catastrophic enough. But now there’s the other issue…

Ticket prices got crushed.

Retail prices of airline ticket in September have plunged by 25% from January, before flight restrictions to China and other countries began to hit, according to the Consumer Price Index for September, released today by the Bureau of Labor Statistics. During the three months of February, March, and April, the CPI for airline tickets plunged 30%, by far the biggest three-month decline in the data going back to 1984. Even after 9-11, the sharpest three-month decline topped out at -5.9%.

For airlines, the crisis began at the end of January with flight restrictions to and from China and it expanded from there. There has been some increase in domestic travel. But international travel – a lucrative segment for airlines – remains scarce given the continued travel bans. And international premium and business travel – the most lucrative segment for airlines – is even scarcer, given the travel bans and the corporate reluctance of sending their people around the globe unless they absolutely have to go.

Delta reports Q3 passenger revenues: -83%.

On Tuesday, Delta Air Lines [DAL] reported that it had lost $5.4 billion in the third quarter, on a 76% drop in total revenue, compared to Q3 last year. While freight revenue dropped only 25% and other revenue increased 21%, passenger revenue collapsed by 83%!

Delta got hit particularly hard because it had focused on the juicy segment of premium business travel. Ticket revenues – the toxic mix of fewer tickets at lower prices – collapsed across the board, but most on the lucrative international routes. Year-over-year change in ticket revenues by segment:

  • Domestic flights: -79%
  • Across the Atlantic: -94%
  • Across the Pacific: -91%
  • Latin America: -86%.

Delta still has $21.5 billion in cash and cash equivalents to eat through. And it will last for a while. Its “daily cash burn” – the new metric, born in the Pandemic, that all airlines now use – was still $18 million a day at the end of September. That’s over $1 billion every two months. In the Q2 report, CEO Ed Bastian said Delta would stop burning cash by year end. Today, he moved that target into the spring of 2021.

“The virus has had a much broader impact over the course of the year than any of us were suspecting,” Bastian told the WSJ in an interview.

And for Delta, it’s not just Delta: Several of the airlines Delta had significant equity stakes in and partnered with, including Virgin Atlantic, Latam Airlines, and Grupo Aeroméxico, have filed for bankruptcy as their governments wisely refused to shanghai taxpayers into bailing out these airlines’ shareholders, such as Delta. Delta has now written off its stakes in Latam and Aeroméxico, a sign that Delta expects its equity stakes to get wiped out in bankruptcy; and it has written down its stake in Virgin Atlantic.

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  107 comments for ““Daily Cash Burn” to Continue till Further Notice: US Air Travelers Still -65%, Ticket Prices -25%, a Toxic Mix. Delta Q3 Passenger Revenues -83%

  1. Jdog says:

    Down the road, this is going to begin to effect the airplane manufacturers. There is a glut of planes now in mothballs, which means the airlines can put off new purchases for a long time.

    • EEngineer says:

      You wouldn’t know it be Boeing’s (BA) stock price…

      • Stuart says:

        That’s because they are in the death, I mean corporate welfare, I mean “ Defense “ business. You knew that.

      • M says:

        As the other commenter noted, a significant portion of their business is weapons production. Given rising tensions in Asia, that will be a booming business for the foreseeable future. I suppose that only the increasing federal deficit and oncoming increases in federal debt interest payments, which were estimated before the pandemic to become equal each year to annual entitlements spending by 2025, will eventually put a limit to that.

        As to airlines and other businesses, the worrisome thing is that it is not clear where the bottom will be located. In other words, the “efficient markets” theory is clearly wrong: investors’ emotions, panic or irrational exuberance of optimism, etc., are the true drivers of market prices.

        Investors regularly are guessing or being driven to and fro by the latest news, like panicked sheep. Thus, it is very hard to predict where future prices will go for a wide array of non-defense oriented businesses due to the uncertainty of major, upcoming events like the election.

        For another example, for airlines, there is going to be a basic level of demand regardless of future circumstances, e.g., panics if the vaccines are not as effective as hoped and there is a twindemic this winter. However, what is that level and when will it be reached?

        Are they at that level now? The death of many airlines is probably baked into the future, unless they receive gigantic, federal subsidies. How many businesses in the economy will ultimately wind up traveling the same road to bankruptcy, since the federal government cannot bail every business out?

        Other countries are in similar traps. E.g., Germany’s ties to Russia (which led to its pipeline to benefit Russia) and to China (which stem from its billionaires’ massive, auto-manufacturing investments in China) may be harmed if the rest of the world retaliates economically against China in the future. Germany also has to choose whether to cut its ties to the EU or to bailout a great many of that block’s members, whose billionaires are in desperate need of bailouts.

      • Jdog says:

        Boeing’s latest sales were negative for the month. No new sales, and only cancellations of previous ones. It is pretty hard to make money that way….

    • Cashboy says:

      Airbus must be suffering with cancelled and postponed orders in a big way.

      No doubt the EU through the European Central Bank will bail them out by buying Airbus bonds in the coming months.

      The UK must be laughing having Brexited (left the EU) and makes it even more desirable to leave with no deal.

      Once people realise the economic disaster the EU is in with immigration of the wrong kind, ECB buying junk bonds and printing money, no £9 Bn monies from the UK to subsidise the EU countries can see the Euro falling against the US Dollar and even the UK pound by the end of 2021.

  2. MonkeyBusiness says:

    The uptrend is very consistent and unmistakable though. Foreign tourists also probably make up 10%(?) or more of prior years’ volume. More than a third of US people flying is definitely more that I expected. The next big test is probably Thanksgiving.

    • Joe Saba says:

      up to 7 flights per day are carrying covid-19 people
      continuing the spread
      hope all airlines go bankrupt – think of all fuel we’ll save and pollution we won’t get

  3. 2banana says:

    Airlines spent $45 Billion in stock buy backs.

    That’s 90 months – Or 7.5 years of burning…

    “Its “daily cash burn” – the new metric, born in the Pandemic, that all air lines now use – was still $18 million a day at the end of September. That’s over $1 billion every two months.”

    • Kaleberg says:

      That means that if the airlines go bankrupt, there is $45B out there in capital to start new airlines. As they used to say early in the airline deregulation experiment: the planes are still there, the airports are still there, the pilots won’t forget how to fly, the crews won’t forget how to crew, so that means it will be relatively inexpensive and easy to start new airlines. This is all about saving upper management and its perks and making sure that wealthy investors get their money without having skin in the game.

      • dave says:

        @kaleberg is spot on. The airlines can go bankrupt and keep operating….its called chapter 11 and airlines have done it before and kept operating. Those that stop, well there is excess capacity and the banks who own the debt on those planes will pay to keep them properly mothballed until they are needed.
        I see no reason why Airlines should get better treatment than restaurants and hotels. And the latter did not recklessly do stock buybacks.

      • Harrold says:

        Just getting the Air Carrier Certificate from the FAA and the certificate for interstate passenger authority issued by the Secretary of Transportation as required by Title 49 can take several years.

        • Joe Saba says:

          yah – unless you are connected to 1% and corrupt congress
          believe me if delta, united, AA and any other big carrier went out of business
          the sale would be expedited due to 1% and corrupt congress

    • happy_man says:

      buy backs, interesting.

      How much did they spend wisely acquiring each other?

      I seem to remember there used to be more than four airlines.

    • Zantetsu says:

      You’re conflating two different pieces of data.

      ALL of airlines spent 45 billion on buybacks.

      ONLY Delta has a cash burn of 18 million a day.

      Your “90 months” figure is therefore representing how long Delta could live if it still had all of the money that ALL airlines spent on buybacks, which is a meaningless figure.

  4. RoundAbout says:

    Airplane = Flying Cruise Ship

    • Harrold says:

      Airplanes are necessary for our country to function, cruise ships, not so much.

      • BuySome says:

        Boxcars and banana boats are necessities. Airplanes rank with towncars in a funeral procession.

        • roddy6667 says:

          Travel, both business and tourism, are(were) a large part of the economy.

        • BuySome says:

          Right, an industry that did not exist before the airplane. Not like they could take Pullman fleet sleepers from a slow market and move them to where they were needed…try that with the airport hotel industry. Not like the early airlines took the most valuable customers created by railroads right out of their compartments. Not like they next went into unserviceable debt to buy jets and use the rest of the travellers to make up their break even boarding factor. They’ve been running slightly ahead of the Sheriff since 1958, and now that they’ve gone and blown out the heel of their Air Jordan’s we should all worry that the turtle has overtaken the rabbit. Airplanes are a luxury that should be cut back to a point of real profitability. Proverbially, if the time savings does not add up in the face of a snowstorm, it might be better to occasionally ride the bus, however uncomfortable it may seem. We’ve also known that since February 1958. Or was everyone sleeping in the terminal while waiting on stand-by to board these supercharged cruise missiles?

  5. leanFIRE_Queen says:

    I’ve been avoiding Delta, United, and AA for decades due to their awful service. But I do care about the fate of Emirates, for example, my favorite for their VIP treatment of kids regardless of class. The right thing to do.

    Would be great to know in what shape the best international airlines are, say those ranked top 40. I get that tons of Americans made themselves captive of these big 3 American ones through credit card rewards, but no all of us play that game and prefer foreign companies instead. These big 3 rank so low, I’m not making up that they s*ck.

    • Harrold says:

      Emirates airline received a $2 billion bailout from the government of Dubai, so they are probably in the best shape of all the airlines.

      Of course, the government of Dubai owns Emirates, so they sort of are bailing out themselves.

      • leanfire_Queen says:

        > Emirates airline received a $2 billion bailout from the government of Dubai, so they are probably in the best shape of all the airlines.

        LOVE IT!!! Thanks, Harrold for this amazing news :-)

        Something I love about Emirates is that they don’t pack the plane with people who don’t pay the ticket: from credit card rewards to retirees, their family members and friends, or family members and friends of current employees.

        I rather see the plane empty than being one of the few paying for the ticket. It’s much more pleasant experience that way.

      • Anthony A. says:

        They are best airline I have ever flown on, and I have flown on most of them all over the globe. Singapore Airlines is a close second! They actually treat you like a customer!

    • Escierto says:

      I absolutely despise US airlines and I want to see every one of them liquidated. Let foreign airlines that remember what customer service is serve the US on all domestic routes. I never fly on a US airline if I can avoid it. GO BANKRUPT YOU SCUM!

      • Wolf Richter says:

        We had a horrible experience with Korean Airlines, and in how the employees handled the situation. I’ll never forget, and I’ll try to never ever fly Korean again (successful so far).

        • MonkeyBusiness says:

          Everytime I hear the name Korean Airlines, I think of NUT RAGE!! ;)

        • roddy6667 says:

          We prefer to fly between the States and China on Korean Air. We have never had a bad experience in all our trips. We are also fans of Incheon Airport in Seoul. Different strokes, etc.

        • The Count says:

          Not to mention the Asiana flight from South Korea where they didn’t train their pilots to land the aircraft without computer guidance so it crashed into the sea wall at SFO. That airline should never be trusted.

      • stan6565 says:

        I think I may have an idea how to name this ingenious proposal… it’s coming to me, wait a second, … wait.

        Oh yes, I should call this, outsourcing?

        Any patent lawyers in the house? I feel I want to patent this.

    • happy_man says:

      hard to avoid the biggest airlines when your govt and corps are busy eliminating competition by allowing unlimited mergers and making them look more affordable with super low interest rates.

    • Cashboy says:

      Emirates is basically Saudi government owned.
      Ethiad and Qatar are also, in effect, government owned.
      Those airlines have all bought their airplanes with cash, not with loans or leased like the western airlines.
      They would therefore be the last to fail of the airlines.

      • The Count says:

        Don’t look now, but Emirates is owned by the government of the UAE. Sort of a completely different country from Saudi Arabia.

  6. Yeah the virus got worse, who would have expected that?

    • nodecentrepublicansleft says:

      In the 1918 pandemic, October was the deadliest month.

      Down here in FL-duh…19 members of the UF football team have Covid-19.

      We won’t ever get back to normal until there’s a vaccine since so many US citizens refuse to embrace basic science. They don’t like “people telling ’em what to do”…..especially those Libtard science believing types.

      I weep for this fading Republic….

      • JC says:

        so blazingly disappointing … had no idea how dysfunctional our country is until now. a huge disappointment.

  7. Tom S. says:

    You’d think there would be more Chapter 11 bankruptcies. Fed balance sheet expansion is alive and well, although I’m not sure if they are buying any airlines debt. So what’s keeping them alive? Delta can’t be the only one to fail with months of extremely depressed revenue.

    • MonkeyBusiness says:

      What’s keeping them alive? Previously there was a bailout. Nowadays, probably Nancy Pelosi’s tweets.

  8. Robert says:

    I keep seeing near completely empty flights in the media. Other media outlets show planes crammed full of people, because they’ve cut flights.

    I might actually get on a plane if I could be sure the flights are empty. Back in the 90s before airline consolidation it would be very common for me to fly coast to coast on near empty planes.

    So has anyone flown anywhere in the last couple of weeks? What’s going on. Are the planes full or empty?

    • Tom S. says:

      I flew ORD to LAX not long ago, flight was completely full on 747 dreamliner. The ticket was less than half of normal (only $100 round trip). There were only 2 or 3 flights to chose from when normally there would be 10 or more. Masks required except when eating or drinking. No obvious business travelers at all, mostly families and couples. I always thought airlines were the ultimate travel and transportation industry, now I’m actually sort of glad I work in the automotive industry.

      • Harvey Mushman says:

        “I flew ORD to LAX not long ago, flight was completely full on 747 dreamliner.”

        The dreamliner is a 787.

    • grepper says:

      in the last 2 months i’ve flown round trip from san diego to omaha, san diego to Minneapolis, san diego to fargo. the flights were 98% to 100% full, and the tickets weren’t cheaper than i normally would experience. these flights were on united, aa, and delta.

      in two weeks i fly to green bay. same story about cost, not cheaper than the past.

      i tried to look at southwest for some of these flights and i can almost never get the “wanna get away” flights(cheaper fares) and have not been able to secure those fares because they seem to sell out more than 4 weeks prior.

      • VintageVNvet says:

        ditto in my former life flying all over USA for the biz,,,
        SWA was by far my fave,,, all the folks there were about as good people as can possibly be expected when having to deal with the USA public day in day out… and their cabin folks frequently treated me to a round or two, and thanked me for my service, etc.
        Absolutely better to buy tickets SIX weeks in advance if you can… and Tuesday the best day, followed by Weds.

    • Zantetsu says:

      I flew in June/July. SFO was a ghost town, the airports got progressively more crowded and less social distancing/mask observing as you went east. I ended in Ohio where there was almost no social distancing/masks. I think they changed their tune some since July. When I flew the flights were about 1/4 to 1/2 as full as I would have expected during normal times. The flight from chicago to SFO was about 1/3 full and they put everyone in the same section of the airplane so we were closer to 2/3 capacity in that section. I think they do that so that their cleaning duties between flights are minimized.

      My mom flew from Ohio to SFO and back about two weeks ago. She said the flights were about the same 1/3 to 1/2 “normal” capacity, and different people from different areas of the country have different attitudes towards Covid, some people do the mimimum or even violate rules (in July someone on my plane refused to wear a mask, the flight crew did nothing about it, we all just lived with it).

  9. andy says:

    For some years they all used this ‘AI’ software designed to jack up ticket prices at all and every opportunity. Direct flights were disappearing cause they need to keep connecting flights packed like sardines. Take those shoes off, spread legs and take x-ray vision naked picture – big brother is watching you.
    Can’t wait to go back.

    • andy says:

      In good news – Apple rolled out iPhone 5 as iPhone 12 Pro Max; price doubled.

    • California Bob says:

      Direct flight began disappearing decades before AI, when most airlines went to the ‘hub-and-spoke’ strategy; i.e. have a few large hubs–SFO, Dulles, O’Hare, LAX, DFW, etc.–where they could concentrate infrastructure, and fly only to/from the hubs. The irony is, now that the FAA and ATC have largely implemented ‘free flight’–i.e. point-to-point everywhere, no need for Victor Airways, the ‘Highways in the Skies’–thanks to GPS the hub-and-spoke model should be an anachronism, and will be eventually due to savings in fuel and time (airline time; your time has no value to plutocrats).

      • Harrold says:

        Thats not why hubs exist.

        There is a reason Southwest does not fly to Montana, Wyoming, North Dakota or South Dakota.

  10. doug says:

    “The virus has had a much broader impact over the course of the year than any of us were suspecting,”

    Really? whocouldanode?

    I guess the private short term rental jets are doing great business? as the wealthy business travelers shift to that over scheduled airlines…
    Just a guess.

    • EJ says:

      The private jet industry is doing great. Supersonic business jet development is charging ahead at full steam.

      Its back to the future… now only the ultra rich can fly.

  11. G89 says:

    Wolf After giving so many billions to the airlines. You can’t let them fall.
    Airlines are a key actor in the modern world.
    Owner could change but they will survive at all cost, I m sure

    • Concerned American says:

      Let them file for bankruptcy and reorganize. Let the shareholders and bond holders take the hit as opposed to us taxpayers. After all the taxpayers got nothing from the massive stock buybacks.

    • Paulo says:

      G89

      just a friendly correction: Airlines were a key factor in the modern world.

      I have many past work associates who migrated to airline jobs. The World was their oyster and would never change, and that was their mindset. Once in awhile I occasionally snoop around some discussion forums, in particular Avcanada. The overriding topic is when do you think the airline industry will return and how many years? The optimistic replies reference 2024.

      Does anyone here remember when tourism wasn’t a swear word, and when visitors actually thought locals were glad to see them? I think that world died out by 1990. Maybe it was the Bali bombings? Maybe it’s just wearisome watching people get scammed out of hundreds of dollars to go whale watching or see a black bear. It is my opinion that in most locations residents would actually prefer the tourists stay home, or at least not descend in hordes.

      I would prefer to see full greyhound bus service again, and good train travel options.

      • VintageVNvet says:

        AGREE with you, like, totally P!
        Especially on the bus and train travel options.
        Lucky enough I suppose to have been able to ride the Trailways all around FL in my youth, as well as several very memorable train trips.
        The best of the train trips was on the last train to leave Chicago for FL before Christmas of 64,,, had to stop and add cars almost every big town, so 24 hours late by the time we arrived to Jax, but it was full of folks from the colleges, Military, etc., etc., and we had one of the best parties eva…
        I, for one, would really love to see the RRs put together a reasonably priced alternative to the airlines,,, and ditto for the buses, since I am never again going to get on a commercial air plane.
        And, for sure, RR and buses should receive at least as much taxpayer support as airlines,,, probably much more with reference for folks wanting to work, and having to move to where the work is, as I, and I am sure many of our generation did.

        • Dave Kunkel says:

          I had a lot of fun traveling by bus in my youth.

          About half-way through Officers Candidate School I received a 2 week pass for the Christmas holiday. I took a Trailways bus back to Nebraska and spent Christmas with my parents in Aurora. On Dec 29 I boarded the bus for the 3 day trip back to Ft. Belvoir, Va.

          Angela got on at the Chicago stop and sat down next to me. She was returning to Washington D.C. after spending Christmas with her sister. Angela was an attractive young woman with a great sense of humor and a quick wit. We had a lot of fun traveling together.

          We were crossing Pennsylvania on December 31st when we realized that it was almost midnight. Most people traveling by bus on New Years Eve are not among those who have been dealt the high cards in life. Angela and I decided that the new year should be celebrated even if we were only passengers on a bus.

          At the stroke of midnight, we went up to the front of the bus and wished everyone a happy new year. I kissed Angela and then we started down the aisle.

          She kissed every guy traveling alone and wished each one a happy new year. I did the same for each of the women traveling alone. The handful of couples traveling together kissed and wished each other a happy new year.

          By the time we got to the back of the bus, everyone was laughing and exchanging new years greetings. Bottles of booze mysteriously appeared and were passed around along with all sorts of cookies and chips.

          Somewhere in the middle of Pennsylvania, 40 strangers became 40 friends celebrating the new year together.

      • G89 says:

        Thanks for your comment Paulo I appreciate. But I disagree.
        Airlines are a key factor in the modern world.

        The airlines and the tourist industry are link together. Everyone want to get his destiny as fast as they can .Imagine a 500 miles travel in a greyhound bus. It would be crazy.

        Also aircraft can cross the ocean . Train or greyhound can’t.

        So I am just not talking about mobility only. Airlines are essential for the Tourist industry also.

      • Cashboy says:

        I think 50% of people go on holiday so they can take pictures on their smart phones and put them on their FaceBook page to show how well they are doing. I am not sure if they actually enjoy the holiday in real with the travelling / security hassle.

        As a single guy, one can see the sense of going to Pattaya in Thailand but why would one want to go and look at the pyramids in Egypt (escorted by the army and people trying to fleece you).
        You may as well get a Chinese Takeaway or a Pizza delivered and sit at your PC and watch YouTube vlogs of the place and browse the pictures on google.
        And from what I can see the kids are not interested, they would prefer to be playing games and on social media on their smart phones in reality.

        Western society, since the 80’s, has been all about showing how well you are doing.

        As George Carlin said:
        The American dream is buying stuff you don’t need, with money you don’t have (debt) to impress people you don’t like.

        • Zantetsu says:

          Why pray tell would a single guy want to go to Thailand? Fill me in.

          I went there once, it was a nice place to visit, but it was with my wife and it was a purely g rated holiday.

        • Josap says:

          I’ve been to Europe several times and S. America a couple of trips. I never took a picture. Had wonderful times and have great memories.

      • 91B20 1stCav (AUS) says:

        Paulo-as one who decided to stay home and become a ‘colorful local’ after my last commercial flight in 2004 (my 6’4″ wasn’t shrinking at the same rate as airline legroom), i’d have to agree with your tourists ‘…at least not descend in hordes…’ observation. (My grower neighbors servicing the steady stream of Southern/Midwest/East Coast ganja-runners would likely disagree, though…).

        May we all find a better day.

  12. Martha Careful says:

    The good news is that oil prices have crashed and operating

  13. Brady Boyd says:

    Business travel is dead and won’t be returning, ……perhaps ever.

    • Harvey Mushman says:

      It has definitely changed. Yesterday and today I am involved in a 3P (Kaizen) event. Normally I would fly out to Raleigh NC for this. This time we are using WebEx. Once corporate sees how much cheaper this is I wonder if I will ever be traveling for a 3P event?

      To me these events are a waste of time… but I’m an old 57 year old. I’m literally the oldest guy in the room (or online).

  14. IdahoPotato says:

    What is the problem here? The airline stocks will go to the moon. Give them a month or two.

    Via Joel Greenblatt:
    “If you bought every company that lost money in 2019 that had a market cap over $1 billion, and so they’re about 261 of those and you bought every single one of those companies, you’ll be up 65 percent so far this year.”

    via Ben Carlson of Ritholtz Capital Management:
    The 2020 returns for stocks from the Russell 3000 Index with a market cap of at least a billion dollars and a negative net income from their latest annual report.

    No of stocks: 416
    Average return: 57%
    Median return: 20%

  15. Seneca's cliff says:

    Put the planes in storage, Pay to keep the pilots up to date on simulators, turn the unused airport concourses in to proper quarantine quarters, then restart in 5 years if jet fuel is still available.

    • andy says:

      No and no. Tethla will make new electhric planeth.

    • Jdog says:

      Problem is, you cannot just park an airplane. It has to be continually maintained, inspected, and certified whether it is flying or not. Not to mention it is probably financed, and the payments have to be made even though it is not generating income.
      It is very expensive to take a plane out of service. Now multiply that by how many?

  16. speedy22 says:

    Sorry to say, but traveling has become more difficult (we all know that) but worse, more expensive. I fly from Bermuda to Switzerland all the time. Not any more and really not at the same price, believe me…..

  17. zagonostra says:

    I recently flew from FLL to PIT (Spirit Airlines), direct flight for $17 taxes included. My Amtrak ticket to nearby small town in Central PA, $25. A taxi ride would probably have been even more expensive. Flight was packed.

    Masks were half-heartily worn. Children were mask-less. The whole mask-wearing on a packed flight where your fellow traveler is able to take his mask off to eat is illogical. I only wear mine to make it easier for the flight attendants in full filling their job duties.

  18. edmondo says:

    I got an email the other day offering me a ticket anywhere in Frontier Airlines system for ten bucks. It costs $20 for the cab to the airport.

    If I never fly again, it will be too soon.

  19. Richard says:

    Korean Air and some Asian carriers – steaks and heated hot wet towels and open bar. US airlines suck – a bag of peanuts and a can of pop. NO thanks. If they go broke the good airlines will be rewarded.

  20. Seneca's cliff says:

    I flew Jet Blue from PDX to JFK a couple of months ago. Middle seats empty, front row empty ( pro tip, book second row). Very strict about masks, even made sure you put it back on in-between sips of your bottle of water (only beverage available). The space between rows was spread back to where it was in the 70’s and they claim to have new upgraded Hepa Air Filters. So except for not much to eat or drink a better experience than before the Covid.

  21. Bobber says:

    It’s okay to let an auto company fend for itself and declare Chapter 11 bankruptcy (like GM), but an airline should get additional government support and protections?

    What is the reason for unequal treatment?

    • Bobber says:

      Also, why is Nancy Pelosi, of all people, telling airlines to delay their layoffs because a package is coming? This is enriching airline stockholders to the detriment of the poor and middle class. Any airline “package” should be delivered only after airline stockholders and management have taken their lumps.

      What Pelosi should be offering is guaranteed debtor-in-possession loans in Chapter 11 proceedings.

      • Bobber says:

        I shouldn’t have singled out Pelosi. I challenge any legislator who professes to support the poor and middle class, or capitalism in general, to justify a bailout of airline stockholders, who should have known the risks.

      • Anthony A. says:

        It’s not her job to offer anyone anything.

  22. Yort says:

    No worries Wolf – San Francisco Federal Reserve Bank President Mary Daly said as long as the Fed creates more wealth inequality, they also create low paying jobs which will reduce inequality, get it? So then those minimum wage jobs people can work 40 hours to buy one plane ticket, therefore very soon everyone will be flying lots and lots and lots. Right……..

    Per Reuters today – U.S. economy, Fed policy in ‘good position,’ Daly says:

    https://www.reuters.com/article/us-usa-fed-daly/u-s-economy-fed-policy-in-a-good-position-daly-says-idUSKBN26Z05K

    The Fed slashed interest rates to zero in the face of the coronavirus pandemic and began pumping trillions of dollars into financial markets, extraordinary actions that have helped fuel stock price gains even as the real economy struggles to regain its footing. Millions of Americans are still out of work.

    The situation, Daly said in a talk Tuesday hosted virtually by the University of California, Irvine, “seems unfair (and) another example of Wall Street winning and Main Street losing.”

    But keeping interest rates at their current near-zero levels until the economy returns to full employment, as the Fed has promised it will do, will in time create more jobs and help reduce inequality, Daly said.

    And while raising rates earlier might keep the already rich from adding further to their wealth, she suggested, it would also exacerbate inequality by making jobs for everyone else even harder to come by.

    “I am not willing to trade millions of jobs … to keep the stock market from going up for the few who have those holdings,” she said

    • fed garbage says:

      So much doublespeak. I wrote a letter of complaint to the fed, more for s%^ts and giggles than anything else. I complained about them increasing the wealth gap. They wrote back – with a well thought out form letter full of garbage I might add- about how they had to keep interest rates low so that the poor people with ARM loans wouldn’t be harmed. You wouldn’t want them harmed, would you?

      Tells me 2 things. One, they couldn’t care less. Two, they’ve had enough email pressure on this to actually bother to come up with a flowery saccharine form letter full of absolute garbage.

      I hope people bring their pitchforks and torches to bear. More so. I saw news of one protest at a branch of theirs. First I’ve ever seen. First time they’ve been seen by many. I have a feeling it scared the crap out of them.

  23. Mad Dog says:

    I couldn’t care less if they all go bankrupt. I hate the airlines so much, I don’t even like to go to the airport to pick up someone. Every time I’ve been to Dulles Airport I’ve gotten scammed or put into an uncomfortable situation. I won’t fly again unless its an emergency and someone pays for my ticket. My experience in 2007 with American Airlines was the last straw. They are a criminal enterprise. When they go bankrupt, I’m going to my local Irish Pub with my wife and have 2 Irish Coffees to celebrate. I’m going to have to have a designated driver to take me home.

  24. Jdog says:

    I am amused by people who think this is over, and next year will be better. Hell, the real depression will not even begin until March or April of 2021. Currently, about 8.5% of all homeowners are in forbearance. That is all that is currently saving the economy. They will be able to extend that forbearance until 3/21/2021, and then it will be eviction time.

    Every city in America will have thousands of foreclosures dumped on the market and home prices will plummet. If the stock market is not already in the toilet by then, that will push it over the cliff.

    Movie theaters, airlines, malls, cruise ships, restaurants, hotels, gyms, bars, theme parks, and several other types of businesses are toast, and any place that derives income from tourism will continue to suffer not only from Covid, but from the collapse of the economy. Millions of jobs are going away never to return.

    If you think government can save you then you are delusional. Tax receipts are plunging, and every city, county, and State is looking to the Federal Government for a bail out, it cannot afford to provide.

    The Federal debt is going parabolic, and that debt must be serviced. Debt service is now about 20% of the Federal budget before all the relief debt piled on. It is going to climb much higher.

    When the stock market and real estate markets crash, the trillions of dollars that are now on loan to the Federal Government in the way of Treasuries at .01% interest, will begin be redirected into depressed assets at bargain prices. This will make Treasury auctions very hard, and fewer buyers for treasuries means higher interest to accommodate the sales of treasuries the government must sell.

    That means the Federal Government will struggle to finance itself, and will no longer be able to spend like a drunken sailor.

    This will not be over next year, or the one after that, or the one after that. This is the big one, and sucking sound you hear is your standard of living going down the drain……

    • Crazy Chester says:

      Damn, Dog. After getting through your screed I can no longer get an erection.

    • Tom says:

      Thank you Jdog for this – I would call “clarity.”

      How else could it possibly unfold? Right now it makes no sense. Shorting stocks, going long gold & long cash isn’t working at this charade of a party post iceberg glance while the drinks flow and the music plays and we’re taking water bulkhead over bulkhead.

  25. Cas127 says:

    Wolf,

    Could really use your expertise in explaining how in the heck some of the airlines have managed to borrow heavily against their *frequent flyer programs*…which sure look a lot more like a liability than an asset.

    Apparently the airlines sell a massive amount of miles to credit card companies, which use the flyer fiat currency (dilutable at issuer whim…like the USD or CCP yuan…) for various go-deeper-into-debt promotions…

    Standard issue Airline/CC Co f*ckery pokery on the FF fiat issue aside, I can at least see how the sale of the miles provides an income flow (with an enormous offsetting liability…ie, actual flyer carriage) to the airlines.

    But…unless the *net* flow (net of future carriage liability) is inconceivably huge *and* for some unimaginable reason the airlines allow CC payments to be in enormous arrears (ie, airlines allow CC cos. to accumulate astronomical accts payable to airlines) I can’t for the life of me figure out where the airlines’ huge lendable FreqFlyer *asset* is.

    Can you figure this out, Wolf?

    Since these FreqFlyer loans are playing a big role in keeping the airlines alive, this would seem to be a mjr topic.

    • Wolf Richter says:

      Yes, good question. Obviously, as you pointed out, it’s not the miles you have accumulated because that’s a liability. I think it’s the intangible asset of loyal customers that you can market all kinds of unrelated stuff to and they’ll look at it… that’s how I see it. WE are the collateral :-]

      • Cas127 says:

        Hmm, I sorta see the intangibles angle…but with the airline equity skating so close to oblivion (especially *pre* frequent flyer secured loans) I’m not exactly sure who the super aggressive creditors might be, willing to lend against “collateral” that would be worthless if the airline isn’t around to fulfill carriage due on bazillions in customer held frequent flyer miles.

        It is all around weird.

        Some subsequent reading makes is sound like the FreqFlyer programs are almost run like stand alone entities (contributing about 15% of airline revenues…somehow).

        Basically it seems as though many, many businesses (not just credit card cos.) pay billions and billions every year for FF miles which they then dole out in various kinds of promotions.

        But with regard to the financials impact, you would think the cash to the airlines would hit revenue fast, with a huge liability as to future committed carriage (when the Customers try to redeem miles over time).

        But, as I mentioned initially…that huge liability is the exact opposite of lendable collateral.

        And huge, nebulous customer “goodwill” is far, far, far from the sort of thing that slit-eyed lenders specializing in near BK situations rely upon.

        (Think closer to wife/childrens’ bodily organs as collateral).

        Anybody on-board with airline industry expertise?

  26. Mad Dog says:

    Another reason I hate the airlines is the following. I used to live right below the flight pattern approach to Reagan National airport here in DC in Glen Echo Maryland ( 20 plus years). The planes routinely violated curfews. They would wake me up at 5AM on Sunday mornings and fly until midnight and 2AM with no hesitation. After 911 things got a lot worse. They started flying 747s and other jumbo jets illegally, right over my house at low altitudes. It was impossible to get a decent nights sleep. Then they started flying cargo along with passengers to make money and were grossly overweight. In order not to get caught the solution was to dump all the fuel out of the plane before they landed so as not to alert the inspectors on the ground when they landed that they were overweight. When I went out of my house, you could smell the aviation fuel pollution in the air from the airlines dumping most of their fuel into the air before they landed. I reported this to my Congressman repeatedly and they tried to do something about it but the deep pockets of the airlines prevailed and nothing was ever done to correct these problems . Congress was essentially in the pockets of the airline industry and still is. So the only solution was to move which we did. In 1999 we sold out house and moved 4 miles away, out of the approach path of the Potomac River. It cost us $30,000 to make the move to another house of the same price but it was well worth it. The sooner these crooked airlines go out of business the happier I’ll be.

  27. Seneca's cliff says:

    The air travel collapse has put the economy of Hawaii in a very bad position. Even if they have issues with quarantines and such worked out the reluctance of customers to travel by plane will crater the tourist volume in Hawaii. The only travel alternative is a cruise ship which is worse. I am not sure I see much way forward for the Aloha state than to drop its population and economy back to the point where it was in about 1970.

  28. MarMar says:

    Headline says -86%, but text says -83%.

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