One Year After the Collapse of the Airline Business Began: What’s the Status Now?

Still collapsed revenues, astronomical losses, red-hot cash-burn, hellish new piles of debt. Meanwhile, amid craziest markets ever, airline shares soared.

By Wolf Richter for WOLF STREET.

United, the US airline with the most flights to China, started suspending some flights between the US and Shanghai, Beijing, and Hong Kong in the first week of February 2020 due to a “significant decline in demand,” it said at the time as the then new coronavirus was spreading. “We will continue to monitor the situation as it develops and will adjust our schedule as needed,” it said. This was followed by flight suspensions and travel bans across the globe. By April, the airline passenger business had collapsed. So where are we now?

Over the past seven days, not quite 707,000 passengers per day on average passed TSA checkpoints at US airports, a measure of how many passengers in the US are flying somewhere. This was down by 61.6% from the same period in 2019, the last full year of the Good Times. At the end of January, the drop from 2019 was over 65%.

Amid all the ups and downs, there still hasn’t been much improvement in terms of airline passenger traffic in the US since last September:

Over the past year, the normal seasonal increases and decreases have been replaced by what may be a new pattern, also with seasonal changes, but different changes. Business travel for all kinds of meetings and conferences – the most lucrative end for airlines – has remained very sparse. And the seasonality of business travel has largely faded from the chart.

And the seasonality of leisure travel has been upended by travel restrictions for foreign vacation destinations and reluctance by many people to get anywhere the inside of an airport just to have fun for a week somewhere else. Driving vacations and RVs have become hot.

In the chart below, the bold red line shows the seven-day moving average of the number of air travelers who passed through TSA checkpoints daily from March 1, 2020, through February 7, 2021. The thin red line indicates the daily number of screenings. The green lines show the same for 2019:

Collapsed revenues and astronomical losses, still.

For the fourth quarter, revenues of the six largest US airlines combined – American, Delta, United, Southwest, Alaska, and JetBlue, with Spirit not having reported yet – plunged by 65.9% from a year earlier. For the year 2020, revenues plunged by 62.7%.

For the fourth quarter, those six airlines combined reported a net loss of $6.6 billion; for the year 2020, they reported a net loss of $34.1 billion.

The airline industry has invented a term to track the performance of the airlines in this environment – “daily cash burn” – to allow folks to calculate at the current rate of daily cash burn how long the airlines can continue to service their debts.

The airlines have piled up mountains of cash from a series of government bailouts, most of them grants, and from the craziest financial markets of all times, created by the Fed, that allowed the airlines to sell more shares and tons of debt.

The airlines have pledged their frequent flyer programs as collateral which allowed Delta, for example, to borrow another $9 billion. They have sold old aircraft, including to Amazon for freighter conversions. They have engaged in sale-lease-backs of their aircraft to raise cash. They have done everything imaginable to each raise many billions of dollars of cash to burn through this year.

Even if business eventually goes back to “normal” – whatever that may mean and however many years this may still take, amid growing industry suspicions that the lucrative business travel segment may never go back to the old normal – those huge mountains of debt will stay.

Meanwhile, back in the financial markets…

Forget the collapse in revenues and the astronomical losses and ongoing cash-burn and the hellish pile of debt these airlines now have… as has become standard practice in the craziest financial markets ever, airline shares have soared, with the WOLF STREET index of the largest 7 airlines more than doubling since April, and aiming back toward levels before the crisis, including gains of nearly 5% today:

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  126 comments for “One Year After the Collapse of the Airline Business Began: What’s the Status Now?

  1. LibDis says:

    While all of the continued comment on craziest markets ever is extremely interesting, the question on everyones mind is, “when will it end”, “will it ever end?”

    Or is the craziest simply ignoring the new normal.

    • EJ says:

      “When will it end?”

      Probably during the singularity? Which could be gentle, or an AI apocalypse. Or WW3. Or some other environmental disaster. Depends how fast some critical tech comes along.

      But thanks to social media and other things, markets are seemingly losing a little bit rationality as time marches on, instead of dumping it and picking it back up cyclically.

      • 2banana says:

        When will it end?

        The the fiat printing and massive debt causes pain to those that cause it.

        Right now it buys lots of votes and very favorable media coverage.

        • Cas127 says:


          Very, very good answer.

          Money printing is pretty much DC’s only means of survival at this point.

          Once significant housing/food/medical inflation can be appropriately pinned on DC, the blowback will be enormous.

          Congressional turnover tends to be pretty amazingly small in any given election, but the public is very, very angry already, so 2022/4 could be very large turnover years.

      • VintageVNvet says:

        Most likely is CME, coronal mass ejection, AKA Carrington Event.
        And, maybe, would be, second, is some sort of human attempt to imitate that.
        Third? Next ”Ice Age”
        IOW, some sort of natural global event beyond control of our species would indicate Gaia has had it with our continual degradation of her wonderful bounty she shares with us every day.

        • Grass Ranger says:

          Gaia is already at work trying to prevent the next ice age from causing a white earth.

      • sunny129 says:

        My bet is CURRENCY CRISIS along with flare up of inflation by Fed’s policy errors!

        • hendrik 1730 says:

          That’s also MY view. It’s a logical outcome.

        • Cashboy says:


          I believe that if all the Central Banks print in unison with each other, this printing can continue for quite a while longer.

          One also notices that western governments do not seem concerned about huge government deficits.

      • char says:

        Taiwan crisis when they try to declare independence during late summer 2021

        • Cas127 says:

          Taiwan has maintained the status quo for 70 years.

          What is supposed to be different about 2021?

        • nick kelly says:

          Mostly agree. The most likely clash of arms is between US and China in South China Sea. I don’t think an actual declaration by Taiwan is likely, at least not without consulting US. Nor is it necessary since Taiwan is de facto independent.

          There has been gradual escalation, increasing recently to an incident every week or so. US has pulled Japan, Oz. SK into
          a type of defensive alliance. China has no local allies, but lots of locals who object to its claims that infringe on half a dozen states.
          China has just issued orders to fire on armed vessels infringing its self- declared waters. Given the hot heads on both sides, a clash seems inevitable.

          As to what is different between now and 70 years ago, or since formation of the CCP Chinese State… where to begin?

          In 1948 after the end of the civil war the CCP didn’t possess a navy of more than a few gun boats. There was no possibility of invading Taiwan. It could have been brushed aside by a few US destroyers, drowning as many PLA as China wanted to commit.
          Today China has built a blue- water navy that it imagines. or at least says, is capable of defeating the US and Allies. BTW: not very well known by public is size and quality of Japanese Navy.

          Nor had Taiwan developed a robust economy which today delivers three times the GDP of the Mainland. Nor had it yet developed its own identity, like the one the CCP promised to respect in Hong Kong.

        • nick kelly says:

          PS: Taiwan GDP 3 times mainland is of course per capita.

    • nick kelly says:

      The markets seem to be saying: If Covid 19, 20, 21…,X was cured tomorrow, new ones would have to be invented to keep stimulus flowing and the bull market intact.

    • Old school says:

      All you need to know is 6.2 paper assets to gdp growing near 10% a year on a economy that’s growing 3.2% per year nominal. Paper assets going to collapse or at the minimum start growing no faster than the economy. How many people going to be in a casino to get a 3.2% long term return first time it takes a plunge.

      Be careful buying the dip. Make sure the bottom is truly in. True bottom probably below 2000 on S&P.

      • Old school says:

        Other three numbers all we need to know:

        1. World Economy $84 T
        2. Financial Assets $520 T
        3. Central Bank Balance Sheet $29 T

        Central Banks doing whatever it takes is a bluff. Toto will pull back the curtain.

      • Wisdom Seeker says:

        Disagree with your second sentence – paper assets do not need to collapse in the absence of a gold standard or a firm central bank. Without meaningful constraints on credit growth, Zimbabwe’s the limit.

        With ongoing monetary inflation, paper asset prices can grow as large as they want. In a cronyism economy, those receiving the newly-created credit and/or owning the inflating assets will gain economic power at the expense of others. Those without pricing power suffer. (Cantillon effect)

        Eventually there will be mass unrest and then the nominal economy will get some sort of inflation. Current policy tools don’t measure inflation correctly, and policymakers are conflicted over the value of inflation (FedGov being broke otherwise…), so the policy response will be far too late.

        Prepare accordingly.

  2. EJ says:

    The long term prospects do not look great either.

    Everything points to a good chunk of long distance work and leisure flights being replaced by alternatives. Operating costs are not dropping that much, even if (and thats a BIG if) the planes fly themselves. Assuming pulse detonation and such pan out, the low hanging technological fruit has already been picked, and the kind of energy/material breakthrough airlines really need would help competing industries.

    And airlines returning to pre-covid business, but with more debt, is not very exciting.

    • intosh says:

      “leisure flights being replaced by alternatives”

      Long term? Are you sure? Based on what? Pent-up demand is huge, I bet.

      • EJ says:

        I was thinking virtual reality (though not just in VR goggles).

        For example, those live African safari feeds (like WildEarth) are a big market, and I’m willing to bet they displaced a whole lot of Safari tours. Which is not a bad thing.

        Pent up demand may be a thing, but its is shorter term. I dont think a really good year for airlines will make up for 2020.

        • intosh says:

          I bet that once the pandemic is behind us, most people will be complelely sick of computers and screens for a while. Besides, current VR is nowhere near where it must be to offer any comparable experiences to the real thing. The cumbersome goggle hinders dramatically the whole experience. Wearing it for more than an hour often becomes a pain. So there is no way VR can replace real travel if engineers do not solve the goggle problem. It’s gonna take another 30 years, with many misfires along the way, for all the necessary tech to be lined up to make the VR/AR revolution a reality.

          A safari is more an exception than the rule in terms of leisure travel. It’s more like going to a better zoo; while a typical leisure travel includes other sensorial experiences such as local food and physical activities (swimming, hiking) that you simply cannot replicate with a screen.

      • Trailer Trash says:

        “Pent-up demand is huge, I bet.”

        Yes, plenty of homeless people want to travel someplace warm. Don’t think many will be buying airplane tickets.

    • Engin-ear says:

      – “The long term prospects do not look great either.”


      “In the long run we are all dead,” John Maynard Keynes (1883-1946), the great British economist.

      But more seriously, 2019 could be declared soon as a global Peak Prosperity year.

      Do not confuse with Peak Happiness.

  3. Fred Flintstone says:

    Is it Bankrupt?…….totally dependent on the government……horribly mismanaged……destroying the environment……an industry subject to disruptive technology……business portion (which is the largest portion)being replace by modern communication devises……
    I want in!!!!!! Right NOW!!!!!!……BIG……what is this imaginary bubble you folks are mumbling about.
    and get me some stock in those big boat people.

    • Brian Hutcheson says:

      If you have been in the stock market as many decades as I have starting in 1969 you would be familiar with expressions like this ” no one knew it was a bubble”
      “this time it is different”

      Or the expression just before the 1929 crash ” we are in an endlessly up wards trajectory it is impossible to lose”
      Do any of these sound familiar ?
      If so we are in the biggest FED bubble ever thanks to Janet Yellen

      • Wisoot says:

        Unfreeze change refreeze. Antigravity tech roll out plan. Tick. Control of people global movement. Just for wealthy. Tick. Depop to free up pension pots money. Tick. Wots not to like from a sick persons point of view?

      • David Hall says:

        As 65+ people get vaccinated, the death rate goes down. They might feel confident about moving around the world once again.

        People exhausted their inheritances looking for paradise. Moving to a new place did not correct internal errors. It is only an external change.

      • Gary Shaw says:

        Hi Brian. Interesting comment…comments that I’ve heard and read many times over my 70 years. But when ?. I’ve been saying to my wife for 20 years “this is unsustainable”….and yet on and on it goes. Another comment I’ve heard a few times is that the next big financial crisis will, almost by design, catch as many people as possible….. 90% lose…. 10% do well. But in the meantime we continue to burn through our capital.

  4. 2banana says:

    Airline stock prices would double again if they announced they were getting into Bitcoin…

    • Anthony A. says:

      If the airlines were smart, they could create a coin of their own, something like “Aircoin” and have Musk tweet about it. Instant $Billions$.

      • 2banana says:

        And tie it into their frequent flier programs!

        Pure genius!!!!

        • Cas127 says:

          Well, if you think about it, those freq flyer miles *are* a sort of saved fiat that the airlines can revalue at their unilateral discretion…

          Why this technique arose in the airline industry, and mostly only there is worthy of study.

          My guess is that corporate-paid flights for freq flying businessmen was the standard (but individuals could choose airline) and freq flyer miles was a way to give kickback bribes to employees who chose a given airline…since corps allowed individuals to keep their biz travel miles.

          Once somebody is in a given FF fiat ecosystem, however, those airlines/miles issuers own your “savings”…as surely as DC owns ours…

        • Trailer Trash says:

          Cas wrote: “freq flyer miles was a way to give kickback bribes to employees who chose a given airline”

          Never thought of it this way before. I like it. Kickbacks and business go together like peanut butter and jelly, so this makes perfect sense. Thank you.

          This suggests that credit card cash-back programs are also kickbacks (that come from the merchants’ hides). As long as someone important waves their legal magic wand and declares “It’s Legal!”, then it’s all good.

      • intosh says:

        Even easier: just have Musk tweet that airlines may create a cryptocurrency and watch the airlines shares soar; no need to really create anything.

  5. William Smith says:

    All of this makes perfect sense when one realizes that we are now living in clown world. Fake news, fake valuations, fake markets, fake science, fake facts, fake people, real clowns.

    • 2banana says:

      It’s all fun and games until the electricity goes out and the grocery stores are empty.

    • roddy6667 says:

      I think we’re all bozos on this bus.

      • Wolf Richter says:

        Made my evening ?

        May hafta purloin it though

      • Cas127 says:

        I do have to admit that all I can hear is circus music whenever DC shows up on TV (ditto MSM “newz”).

      • 91B20 1stCav (AUS) says:

        roddy/Wolf-don’t forget in the purloin, ‘…while we’re waiting for the electrician-or someone like him…’ to tip your cap to the immortal Firesign Theatre…

        may we all find a better day

  6. 8_mile_road says:

    “They have done everything imaginable to each raise many billions of dollars of cash to burn through this year.”

    NOT TRUE. The airlines could have issued additional shares of stocks to raise capital. Sure, the stock price will collapse, but it is on the expenses on stockholders, not the taxpayers.

    • 2banana says:

      Heck, they could have just sold the shares they purchased in the billions of dollars they spent in buybacks.

      And then they could start clawing back executive bonuses tied to those share buybacks pumping performances.

  7. OutWest says:

    Airline travel will come back this spring and early summer just as quickly as it tanked a year ago now that large scale immunizations are underway in many countries around the world.

    Nearly 10% of Americans have had their first covid shot at this point and reportedly heard immunity in the US will occur this summer…if you believe the news.

    As soon as social media ‘influencers’ start bragging online about epic travel deals, the masses will follow almost immediately. Who isn’t ready to reschedule flights to see family and friends or to go sit on a beach somewhere? Never underestimate wealthy consumers who have been in many ways insulated from this economic downturn.

    • Wolf Richter says:


      There were people here in April and May, making the same comment about the airline business being 100% back by the fall 2020, the V-shaped recovery, you know. One of the commenters was “Just Some Random Guy.” It’s been a while since he has commented here. We miss his relentless optimism, now obviated by events.

      Airline traffic recoveries are measured in years, including those after 9/11 and the Financial Crisis.

      And the crucial business segment may never fully recover. Companies have figured out that many of these business trips were unnecessary, inefficient, and unproductive, and that they’re better off without them, and that’s a permanent change. And that was the most profitable part of the airline business, particularly for airlines like Delta — and Delta has acknowledged that already.

      • SpencerG says:

        I agree with you that the airline traffic recovery will take time. But I disagree with your last paragraph here.

        A lot of what happens in the business world is based on competition. When you and ALL of your competitors are grounded then most airline business trips look “unnecessary, inefficient, and unproductive.” But once your competitors have the ability to fly out to meet customers (their own and YOURS) it can look pretty arrogant to try to manage those relationships via Zoom meetings instead.

        Again, that will take time to sort out… but it is not like American businesses have been spending money willy-nilly on airline travel in the fallout of the Great Recession.

        • RightNYer says:

          Here’s the thing though. A lot of that was done simply because “we’ve always done it that way.”

          While single 25 year olds might like getting wined and dined by vendors, most of the decision makers don’t.

          I know many people who would grudgingly say “I’m really not in the mood to go out to dinner with X business associate, I just want to go home and relax with my family.”

          You’re going to see a lot of the clients telling the businesses that used to come fly across the country for a few hour meeting and dinner that they’d rather just talk on Zoom.

        • Cas127 says:


          “that they’d rather just talk on Zoom.”

          Well, sh*t, there went the “escort” business too…how is a candidate vendor supposed to break in now…kick back cam girl credits…?

      • C says:

        I’m immersed daily in the industry. It’s going to take time. The demographics of those flying today is entirely different than one year ago. My airline really needs business and international travel back at pre-pandemic levels. That’s going to be measured in years.

        I can’t stress enough the demographic shift that has happened.


        • RightNYer says:

          Hi C, can you elaborate a bit? Thanks.

        • C says:


          I’m flying domestic only so keep that in mind. My observation is that more people are traveling for vacation or personal reasons. I’ve made it a point to talk with our gate agents around the system and ask about our first class cabin. The most common reply is that it’s mile redemption travel and not full fair passengers. We used to cell that class as well as economy comfort.

          The flight attendants that I work with tell me a similar story. I’m not one to regularly engage with passengers so I’m not asking these questions directly but I can also observe that the well dressed business traveler or corporate traveler sporting their company emblazoned shirt has been greatly reduced.

          Cancun and the Florida beach destination seem to be the fullest flights I’m flying these days. Hub to hub is always packed but most others are around 70% capacity which is already reduced as we’re still not selling the middle seat.

          Hope this helps. Stay well.


    • KGC says:

      Large scale immunizations? Where? And at what number do you feel safe traveling?

      The WSJ today has serious bio-med companies predicting that this will turn from a pandemic into an endemic (that means permanent) human virus, like the flu.

      Europe isn’t expected to hit 50% compliance until late 2023, and is facing massive numbers (over 50% in France alone) of the population refusing to vaccinate. Developing countries (figure 2/3 of the worlds population) won’t have access to a vaccine before late next year, if they can afford it.

      Do the basic math; if in the USA we hit 10% of the “viable” population inoculated in the three months shots have been available, how long will it take to reach 90%? Unless something changes that works out to almost three years. And don’t forget that leaves out kids too young to take it and any population increase (legal or illegal). The infrastructure can’t increase fast enough to boost those numbers much.

      There are some “epic travel deals” available right now. Marriott is almost willing to pay for people to stay at their resorts. Except the countries they’re in (like Canada) are closed and they don’t plan to open anytime soon. You can buy into them if you want, but I’d check the refund policies first.

      • polecat says:

        I believe that these new ‘covid-free’ travel requirements being put forth by various air carriers is going to blow back onto them – people will just decide it’s just not worth the hassle, especially when flying has become less than an enjoyable experience for most. In that light, ‘burn rate’ has a whole new meaning ….

      • Gerrard White says:


        Do you think the US or the EU will succeed in vaccinating illegal immigrants?

        What’s their ‘estimated number’ in the US – 10M upwards

        Add them in to reluctant or anti vaccine numbers

        Africa has not, apart from South Africa, suffered much so far – persuading them to vaccine will not be possible, even if they could afford it

        • KGC says:

          I think the vaccination of immigrants is going to become a very sticky political issue, not just in the USA and EU, but in places like Lebanon (where the population has increased over 20% in the last decade due to Syrian refugees), and much of sub-Saharan Africa (due to the millions of Chinese now working there). Remember, immigration was one of the major topics involved in Brexit, and the EU can hardly welcome with open arms boatloads of unvaccinated refugees when they are locking down their own indigenous population and restricting travel within the Schengen zone.

          Some parts of this world are doomed to be damaged with this virus for decades. We have vaccines for polio and the plague but they still exist, and the ability of this virus to mutate, along with it’s abiluty to be transmitted by other mammals, tell me things are not going back to “normal” within my lifetime.

    • Sam says:

      The wealthy are not going to travel on aluminum tube cattle cars that are populated by “dope filled demons” [a prosperity pastor’s reason why he & staff will only travel on their church’s bizjets fleet]. Quaint, no?
      The demand for charter (Netjets, and others has increased 40% (& elevated price per flt. hour), while aircraft brokers are experiencing a surge in requests for bigger/newer ships.
      An observation from various flightdecks & flight departments for “the lifestyles of the rich and aimless”. ?
      Happy Trail$

    • Cashboy says:

      OutWest is clearly being sarcastic.

      Here on the other side of the Pond (UK), some government officials have already warned that there could well be a new stronger virus appearing in November.
      I am hoping to get to Thailand before October 2021 so that I can be stuck in Thailand as I was from March 2020 to August 2020.

    • Swamp Creature says:


      “Nearly 10% of Americans have had their first covid shot at this point and reportedly heard immunity in the US will occur this summer…if you believe the news.”

      I don’t believe the fake news media . I look at facts. Only 2% of the residence of Montgomery Co, just outside of the DC Swamp have been vaccinated. We’re a long way from heard immunity. Get real!

  8. Boomer says:

    Meanwhile Dems looking at another $14 Billion payroll assistance to U.S. airlines to keep thousands of workers on the job through 9/30 on top of the $40 billion received to date. No such deal for Keystone Pipeline jobs or the American oil producers.

    • CRV says:

      “to keep thousands of workers on the job”

      What jobs? 60% of the flights are gone. While some jobs are still needed to do basic things regardless of how many flights there are, most jobs aren’t worth keeping. Those people (i.e. flight crews) are doing nothing for over a year now. Being on the payroll doesn’t mean you are doing a job. They should be counted as jobless.

    • Lance Manly says:

      Yup, we are going to be missing those 50 or so permanent jobs with Keystone.

      • Cas127 says:


        The jobs may not have been permanent…but they were going to pay billions and billions in comp in the interim.

        Those are billions not confiscated through taxation or inflationary fiat fraud.

        *And* the nation ends up with an energy transport pipeline.

    • pbfurn says:

      Oil field workers are mostly “deplorables”. Pay attention! There is going to be a test on all of this material soon.

      • Swamp Creature says:

        Wait for them to call them “mostly Ex-convicts” . Worse than deplorables

  9. timbers says:

    As an avid blu ray movie buff, I see strong inflation in my hobby.

    Boutique labels buy rights to make physical media. 4K blu ray is in demand amongst the physical media crowd. With so many retail options gone, prices are significantly up. For example, a well scanned and encoded 4k semi-cult film – like Daughters of Darkness that went of $30-35 dollars pre-Covid now seem to be around $45, as just announced The Final Countdown. Same label, similar cult status, but higher price now. There are fewer options and those we offer them have higher prices. Amazon certainly has not been shy about higher prices.

    But alas not to worry. No doubt the Fed will capture all this in it’s CPI.

    • joe2 says:

      I have a collection basically to get the classic movies that are destined to be edited or deleted “to save the children”. The original Dumbo or Blazing Saddles come to mind. And you are right, prices are increasing.

      But don’t get your hopes up that they are an investment if CD prices are any example. Average $2 and many will bring only $0.10-$0.50 from the buyers. I’d rather give them away.

    • Rowen says:

      Same shit in every industry. Private Equity firms flush with cash buy out all the firms in a sector so that they can create bottlenecks in commerce. Had to explain to a rancher friend last week why retail beef prices keep getting higher, when the price he gets paid gets smaller. Yup, private equity buying out the slaugherhouses and cold storage facilities.

    • Cas127 says:


      Are these the one-off, custom burned discs?

      If not (ie, mass produced), it may be that the move to online is starting to really shrink mass produced DVD numbers, leading the economies of scale to reverse…resulting in higher prices.

      For myself, I’ll trade time for cost…I like rummaging through the $1 to $4 discount bonus bins, looking for the 1% or 2% of titles that are classics. A surprising number of decent indies also show up in these bins (they can’t afford the high profile distribution of the mjr studios).

  10. joe2 says:

    I read the reference on how Delta engineered a liability – free travel obligations – into an asset and financialized it. Unbelievable. All I can think is that there is a lot of OPM floating around that is being used like monopoly money by investment brokers to churn commissions. Due diligence has become simply the search for a bigger fool.

    There actually is some corruption of incentives involved since commissions, salaries, and growing AUM involves increasing returns which increases risk. But no matter if the agent can bail before the facts interfere with the promises since client fiduciary responsibilities don’t apply.

  11. Stephen C. says:

    I’ve been thinking . . . $2,000 isn’t nearly enough. I’m selling my next vote for a private jet.

    • Vic says:

      Private jet…to go where?

      • Stephen C. says:

        First I’d use the jet (instead of getting on a cattle car plane or an Amtrak)
        to go see my 92 year old mother who is in a strict lockdown in a senior residence and may any do go into hospice. Then I’d get me a hotel room right on the beach in Hawaii, in a place that isn’t going to arrest me for stepping out of my room to sit on a lounge chair. I know of such places in Kauai and more daring colleagues have done this using commercial flights, so I know it’s possible. Then I’d look into the list of countries that haven’t sealed themselves off. There is a list worth pursuing on the State Department website. Since I’m not traveling to be in crowds but to find a comfortable place to snuggle in with my wife and sample unique cuisine and local wines, along with researching retirement locales, I think I could reasonably stay at just the same level of risk. Or lower risk than being stuck here in Camp USA, given how my neighbors don’t wear masks, and apparently there are, according to the article, 707K required or willing to fly in the cattle cars.

        However, doesn’t look like Uncle Joe is going to buy me a private jet, or as the song goes, a Mercedes Benz, so I’ll keep on keeping on here within these four walls.

  12. Bobber says:

    Why don’t the travel and restaurant industries band get together and create a new digital currency, accepted as payment by all travel industry participants and restaurants. Of course, two mysterious unknown parties named TravelJunky and Foodjunky would have to own 80% of the float, to make the public shares scarce.

    • Cas127 says:

      “80% of the float”


      Most people don’t realize just how *little* of a company actually gets sold in an IPO…20% or less very frequently.

      Yet, that thin slice gets hyped into mkt caps of billions…so that 6 months later (after the insider lockups expire) the other 80% can incrementally hit the mkt and bleed away the gains of the overeager IPO buyers…

  13. sunny129 says:

    When will it end?

    Market bubbles are a function of “psychology,” as investors’ herding behavior drives prices higher. Therefore, price and valuations are only a reflection of that psychology.

    All market crashes, which resulted from the preceding bubble, resulted from things unrelated to valuation levels. Those catalysts have ranged from liquidity issues to government actions, currency crisis, monetary policy mistakes, recessions, or inflationary spikes. Those events were the catalyst, or trigger, that started the “reversion in sentiment” by investors.

    The main trigger point will be obvious retrospectively, when the Fed’s puts no longer work!

    • Sir Eduard R. Dingleberry III says:

      Ah come on! The Fed can do this forever! That is why the number infinity was invented! It was created for the Fed! Even Scaredypants Powell has admitted this, saying his support is “unlimited.”

      • sunny129 says:

        The $ currency crisis and coming reflation cannot be solved with more printing! Globalwide crisis, unlike any time before save 1920s! It is WHEN NOT IF!?

        Why did 1987 crash, 2000 dot com bust and housing bubble bust happened? Fed is reactive but NEVER been pro active! Read history
        The only exception is formed Fed chair – Volker!

        • sunny129 says:

          Extraordinary Popular Delusions & The Madness Of (Modern) Crowds
          Charles Mackay 1841

          Essential is the understanding of the role psychology plays in the formation and expansion of financial manias. From the 1711 “South Sea Bubble” to the 2000 “ crash,” all bubbles formed from a similar “panic” by investors to chase ongoing speculation.

          Importantly, in all cases, the speculators involved all thought “this time was different.”
          h/t ria(realinvestmentadvice)

        • Sir Eduard R. Dingleberry III says:

          Guess Scaredypants Powell hopes to imitate Volker by raising rates to counter some “sane” level of high inflation. That is the best case scenario. Let’s all pray for that. Would be nice to see the bubbles crash. I ain’t showerin’ til it happens! And no one can make me!

    • RightNYer says:

      The best line I’ve seen lately is that the stock market is merely a reflection of how rich people feel the economy is doing. From their standpoint, it’s great! They are comfortably working from home. They order whatever they want on Amazon or Walmart and it magically shows up at their doors. They have all this extra money to buy Pelotons or renovate their bathrooms with. So on and so forth.

      Many small business owners don’t feel so lucky, especially those who don’t cater to the rich, like yacht sellers or high end jewelers.

    • Cas127 says:

      From fall 2017 to fall 2018, the Fed allowed interest rates to go up a pathetic 1%.

      By yr end 2018, the mkt had fallen by 20% off its Sept peak.

      An inch off of ZIRP…and the mkts will collapse.

      Nobody wants to be in a pandemic 40 PE stock…they just hate being in a 1% Treasury or 4% CCC flatlining organ donor *worse* (although those people are *wrong*…take the 1%)

  14. SpencerG says:

    I actually think the American airline industry will be fine once things get back to normal. Their managers have proven themselves first-rate at controlling costs and making profits in the aftermath of the Great Recession.

    That said… it will take some time. Of all the charts Wolf gives us above the one that I find the weirdest is the Market Cap one. Why on earth would Wall Street be bidding up these stocks right now when for the entire previous decade they were badmouthing the obvious turnaround in that industry? Not even Warren Buffet investing in them could get more than a temporary boost to their stock prices.

    • sunny129 says:

      ‘Their managers have proven themselves first-rate at controlling costs and making profits in the aftermath of the Great Recession’

      First Buy-Back shares in Billions ( padding options for senior officials) and then later begging for bailouts is NOT sign of credible management! NO different than those at BOEING!

      • SpencerG says:

        The buybacks were in response to the airline stocks not rising commensurate with their turnaround status. The management team of ANY public company works on behalf of the shareholders. The other alternative was to raise the dividends… which are more highly taxed.

        The simple truth is that any management professional who simply paid debt down to nothing without trying to reward shareholders at the same time would have ended up on the unemployment line. Delta Airlines reduced their debt so far and so fast that it achieved “investment grade” ratings from the three rating agencies. I believe that is the first time in history that an airline company has achieved that. Does that sound like a management team that is not focused on profitability even in a down economy?

        Frankly, any of us in their shoes would have done the same thing. It is hard to predict when a “once-in-a-century pandemic” will strike with any kind of certainty. This year? Next year? Last year? Five years from now?

        Hindsight may be 20/20… but it tells us little about the quality of the management teams of the U.S. airline companies… especially seeing as how there are ZERO management teams around the globe that have been proven to have done better.

        • sunny129 says:

          Wonder why Buy-Back shares was illegal prior to 1986?

          It contributes NOTHING to productive Economy, capex spending, in creating jobs, just padding their options, reduce outstanding shares to increase earnings ! Wow!
          Nearly 50% of rise in S&P has come from buy-back shares!
          If you are part of top 10%, everything is dandy!

        • sunny129 says:

          7 reasons for why the buy-backs should illegal

          yahoo/finance June ’19

          My favorits
          -Stock Buybacks Reward a Lack of Creativity and Innovation
          -Stock Buybacks Provide a False Picture
          Stock Buybacks Create Income Inequality

          The Ugly Truth Behind Stock Buybacks

        • Gerrard White says:

          @Spencer G

          There were frequent warnings, new crossover virus-es emerging every 4 or 5 years since 1997

          No one much, least of airlines, took this seriously, except that quite a few health pros and alternative ind ag critics did

          Now airlines and everyone else will – but seriously enough to work to prevent another crossover? Another virus which may well behave differently, spread even more rapidly, be even more asymptomatic, until…That’s going to require a lot of work, most of it unpleasant in short term effects

          Or are we now in the Great Virus Era?

          Perhaps these efficient managements would like to consider how to plan for this?

    • Lawefa says:

      These top class managers cash cowed out 6 years ago and now ask for a bailout? How about these ask for that money back if hey want to survive as a reputable business. There airlines are a joke.

  15. Aussie Andy says:

    Must be time to send in Dave Ramsey

  16. Lawefa says:

    Overdue timing for a new business model and restructuring. Face it airlines, a good chunk of these flights just aren’t ever coming back. As for the ridiculous markets with the airlines….who can trust these markets at this point? They are over manipulated and reek of forced market gains. Bonus points for Wolf in slipping in the phrase “hellish new piles of debt” in this article.

  17. Drunk Gambler says:

    It’s always Doom and Gloom with Wolf.
    Can anyone remember anything positive has been posted here for last year?
    Just for a change?!
    It’s easier to bailout airlines in 2020, than banks in 2008. Besides, current crisis wasn’t engineered by airlines.
    People are gonna fly again. Not as much as they used to, but there is pent up demand for weddings, vacations, conventions, family reunions.
    People are sick of isolation, NETFLIX, ZOOM and Grand Canyon.

    • Old School says:

      I something positive courtesy of David Stockman. In the year 2020 SP500 earnings went down by 33% and SP500 stocks went up 25%. The power of positive thinking.

      • WES says:

        With bribery O.K. and money free to flow, swamp real estate has doubled in price!

    • Wolf Richter says:

      Drunk Gambler,

      Just because you don’t read my stuff, doesn’t mean I don’t write it. Here are the most recent ones just in February with “anything positive”

      Trade deficit with China is down, second year in a row:

      Consumers pay off their credit card at record pace, which is wonderful news, given the high interest rates on credit cards:

      Much maligned short sellers have an important role to play as they’re sometimes the only sheriff on Wall Street. This is very positive. It practically gives me hope:

      If you’re the Fed and want more inflation, here is some positive news:

      Surging home prices, which is positive news for you surely, so that Fed should stop buying MBS:

      Rents plunge in the most expensive cities, which is a GREAT news for tenants and businesses because those tenants have more money left over to spend on other things:

      More good news on inflation, and Fed lovers and just about every mainstream economist should be ecstatic:

    • CRV says:

      I’m getting tired of hearing about pent-up demand.
      Weddings? Maybe people postponed their wedding and will do it as soon as it is possible to do it with large crowds, but aren’t going to do more weddings.
      Vacations? I used to go twice a year. I’m i going four times next year to make up for last year? No.
      Conventions? Most are on set dates in a year. Those moments have past and can’t get pulled from the past into the present.
      Family reunions? Same as for conventions. Maybe there will be a brief mania for reunions, but that mania will pass after the first reunion.
      Dining out? If you were used to go out once a week, are you going five times a week to make up for the lost pleasures?
      Buying stuff? Most off what people didn’t spent on all of the above has been spend on durable goods, and home improvements, which you don’t replace or do every year.
      And what currency was left after paying down credit card debts has gone to the gambling casino’s called the stock markets.

      • RightNYer says:

        You and me both. It seems like from the very beginning of the pandemic, every narrative has been one of wishful thinking. First, in February, the narrative was that the virus wouldn’t reach the United States. Then, as it was surging in New York in March, the new narrative was that we’d be fine, because summer was approaching, and the virus would die out in hot weather, even as that idea was thoroughly discredited by surges in cases in tropical climates like Singapore and Vietnam.

        This type of nonsense went on and on and people couldn’t wrap their heads around the fact that the new pandemic accelerated some trends, started others and in each case would lead to permanent changes.

        The pent-up demand is among the most annoying. I do think the very wealthy and retired MAY take an extra vacation, but they’ll be the exception, not the rule. Most people have limited funds, and in any case, have to work.

        • VintageVNvet says:

          OK, after reading the above comments about ”pent up demand” ,,,I just decided I am definitely going to take a very very long trip to the Pacific coastal area north of, say Santa Barbara as soon as the usual spring wander lust hits this year, to make up for the lack of any vacay from the terrible awful horrible excessive FL HEAT.
          Retired yes, finally, and loving every minute of it except for having to be inside in the cool AC most of the time, day and night, for 5-7 months due to the HEAT in FL.
          Pent up? More like penned up IMO, and I really think many others in similar situation will do their best to get out there and spend all the money we didn’t spend last year!
          Maybe just spend a month or two in a driftwood shelter on the beach as we did frequently back in the late 1960-early 70 era?
          Not even::: these old bones like a real bed these days, so get ready for the huge spike in motels, etc., this summer!

        • RightNYer says:

          Maybe I’m just weird, but the Florida heat doesn’t bother me, even when it’s 90 and humid.

        • VintageVNvet says:

          yeah buddy, I really can hear ya rnyr:
          at this point, the current challenge appears to be a result of the many years working manual labor in full sun right through the summer in Naples,,, plus, once, working inside four walls, no roof and no breeze, hanging with a full size (129#) jackhammer taking out the very very thick slab (2 feet+) from a bank vault leading to heat stroke and waking up in hospital six hours later…
          now including close to heat stroke when trying to work in even 75 degrees,, etc
          loving the current weather,,, and have been asking if we could possible just exchange climate with SF??? going to doubt Wolf would allow that though, so heading west, per earlier!

        • RightNYer says:

          It’s funny, I actually can’t do the California climate. The air is so dry my skin dries out. I need humidity. But as I said, I’m weird :)

        • Tom S. says:

          I’m leaning towards the pent up demand rising oil/energy prices scenario at this point. People will want to travel once it’s ok, based on everyone I talk to. They will get the vaccine and they will take a trip. Even if it only gets back to 75% of where it was last year, the oil production cuts and amount of money people are sitting on will cause the rapid inflation that the fed is basically expecting to happen at this point. We’re in for a 2 year rollercoaster of policy…I think this stimulus is going to be it for the fiscal side if rates come up, though, which is really unfortunate for our infrastructure.

    • Tom10 says:

      With all the global warming currently
      Going on up north, we picked the perfect
      Time to park the machinery and go south.

      Having a great time. Spending all locally
      With mom and pop businesses that remind me of home. You realize just how strong and resilient we are.

    • Lance Manly says:

      Business travel is where the money is. They pay full rate.

  18. Memento mori says:

    Yeah, they are’s sending $1400 to household with income $200,000 or less.
    This is astounding, I can understand that the cutoff would be around $50k or less but people making $100k to $200k a year getting relief checks is nuts, I think they are trying to destroy the currency on purpose. Tough times ahead.

  19. MCH says:

    Airline, Smairline, BUY AAL, squeeze the shorts.

    That way, AAL can raise some more cash to stave off bankruptcy a bit longer.

  20. Sir.PiratePapirus says:

    The virus lock downs will continue under the pretext of mutations and until the powers that be are done squeezing every bit of benefits from it. The crisis provides their best opportunity. From draconian laws to limits on international travel to tests of helicopter money drops to produce inflation to limits on individual liberties and de globalization. Until then, these airlines and other businesses are done. Even afterwards their business model will have to change, things like business travel will never be back to where it was because there is no need for it, zoom and similar tech have replaced it. Anyone buying airlines now for an investment and not a trade will probably not make any money. On the plus side, maybe these airlines can open some extra ass room for us economic travelers and not squeeze us like sardines for 15 hours, since the business and first class will not have much use anymore. I doubt it though, they will probably cut the fleet and use the extra space left from business to put even more tiny chairs for the peasants.

    • Gerrard White says:


      International airlines are pushing back plane orders to 2026

      Asia might be ok before then, and have worked out protocols between themselves for international travel

      Rest of the world -unlikely

      And – more and more health experts are predicting this pandemic is already on it’s way to becoming endemic, give it a few more years to settle in settle down

      Then maybe figure out what may be done to prevent the next crossover

  21. Kenny Logouts says:

    It’ll all be back to normal, after more bailouts and disaster capitalism.

    Another cycle end correction largely averted, and rather than let it select winners and losers via survival of fittest, gov/fed let everyone who they like be a winner… again.

    The risk now as others have noted is currency crisis and inflation event.

    The fed will be happy as they want inflation.
    They just need to look like they don’t want it.

  22. Gerrard White says:


    A suggestion

    Make a daily/monthly cashburn chart per US and major EU airlines (inc Brit)

    Add in Boeing – last quarter was approx $5B negative, not including debt service (I think), must be getting worse this quarter, at least the debt service –

  23. Old School says:

    It’s been a year and people developed new habits. Some things will forever be changed. Government will try to keep much of the creative destruction from happening, but USA brought a lot of it’s future forward in 2020 and will pay for it with lower real wealth and income for the future. Phony government accounting will cover up as much as they can.

    • Paulo says:

      I agree OS. One thing I did not read in the above comments are the incentive effects of air miles and type programs on CC. Every mega traveler I know always comment how their ____________ card allows them to fly for free, etc. That could be hyped up more.

      hmmmm we always fly for free. (And break even in Vegas). :-)

      Long before Covid my wife and I resolved to be done with flying. #1, she used to travel the World before she met me. #2, I spent too many days working away in my younger years. Plus, the security, scrutiny, crowds, and general painful experience of anything that isn’t first class. I built a traditional wood fired sauna if we want heat. We cook amazing meals if we want culinary joy. And our own home is like a comfortable slipper. Screw it, we’ll go fishing and kayaking with the Westie, and stay close to home. Many hotels have bedbugs, even good ones. Crowds? Stress about connections?

      Mind you, there will be Chinese knockoff airliners instead of Boeing models. Give it 10 years. That might be cheaper.

      My buddy is stuck in Mexico and has been for a few months already. Maybe until end of May or June. A Covid no flights home kind of thing. No thanks. No thanks to it all.

      • Sir.PiratePapirus says:

        ‘Mind you, there will be Chinese knockoff airliners instead of Boeing models. Give it 10 years. That might be cheaper. ‘

        Paulo. Boeing is the worst, i don’t think China can produce anything as terrible as boeing, so whatever they will produce it will be a welcome relief. When i fly i make sure the aircraft is airbus. Have you not heard or seen the news how boeing aircraft seem to disappear from the radar every so often?

        • Paulo says:

          Yeah…but Boeing used to be awesome including the 737. Airbus is an excellent maker. You knew Boeing was in trouble when they leveraged the last Govt to impose a +300 % tariff on Bombardier class C. So, Bombardier sold the rights to Airbus and Boeing built the Max. ’nuff said on their acumen.

        • Sam says:

          SRP (and Paulo),

          Get a clue. BA lost the (dumping) court case. Resorted in buying ERJ to compete against the A220 (as BA shutdown the 717 acquired from Mac air yrs. ago). BA’s mgmt (by MBA) screwed the pooch on both.
          CN gov’t gave Airbus 50% of Bombardier for zero/zip.
          C919 (Comac) is a Chinese fire drill that’s falling further behind in its development (and clueless on logistical support which is crucial for mrkt acceptance), despite having sourced Western subsystems (avionics/engines/hydraulics/ect.) for the 919.
          Bombardier is on-board w/C919’s supply chain services, electrical systems, human interface, cockpit, flight training, flight-test support, sales, and marketing.

          Remember: BA’s Comm aircraft group accounts for 15% of BA’s revenue.

          Position: None. The above thoughts come from multiples of folks (flt crews, maintenance & operations) who know the ‘big iron’ sector.

          I’ll stay on the bizjet side, which is emerging from its (since ’09) coma.

        • Paulo says:

          BA lost the case after Bombardier sold to Airbus.

          Bombardier C was a good product that threatened Boeing, particularly 737.

  24. Old School says:

    I worked too much and always kept the money flowing for my family. Once kids were out of house I knew I was done. Would rather live in simple ‘American poverty’ which means you have all you need and a little of what you want than to grind it out in a corporation anymore.

  25. Xavier Caveat says:

    If man was meant to fly, we’d have wings instead of government bailouts.

  26. Island Teal says:

    Good article. Good comments. Really love hearing the reference to ” back to normal”.
    When that gets defined and adjusted to reflect the future world that we are entering then it will be relevant once again. The future is a scary place with what is being forced upon us. ?

  27. Nehemiah says:

    At some point, tight supplies will send oil prices surging, and if nothing else has triggered a deep collapse of our crazy markets by then, that certainly will. Alternatively, the public debt may simply become so huge that it drags economic growth down to nothing, which will invariably begin to affect markets. For example, if public debt is equal to GDP and interest is equal to nominal GDP, then all nominal growth is going to pay the interest. Or if the public debt grows to 2 times GDP and interest is a mere 50% of nominal GDP, still all nominal growth in the national income goes to pay interest on the public debt. It is easy to imagine a scenario in which interest payments exceed nominal growth in national income. If the Fed responds by targeting a negative Fed funds rate, well, I don’t think that has sparked a boom in European countries that have tried it. Demography will also begin to make its weight felt at some point. No bubble expands forever, although it may seem like forever while it continues.

  28. alex says:

    When it ends?
    It has ended. We are in suspension, like our friend the Road Runner failing to navigate the corner. Gravity is a bitch.

  29. Stephen C. says:

    There are no problems for airlines. New bill being introduced with, apparently:

    $14 billion in payroll assistance to airlines, with $1 billion for their contractors

    8 billion for airports

    It’s nice to have friends in DC.

    • MonkeyBusiness says:

      Congress critters need to fly and not all of them have access to private jets.

      No surprise here.

  30. Swamp Creature says:

    In the 70s I took a stock market course in Hawaii. The old school, instructor, said to stay away from Airline stocks. He said they had good cash flow but were highly leveraged, and cyclical. Now they don’t even have the good cash flow and are dependent on taxpayer bailouts to survive.

    Since I took the course here’s their track record:

    Eastern Airlines – bankrupt
    TWA Airlines – bankrupt
    Pan American – bankrupt
    Brantiff Airlines – bankrupt
    Continental Airlines – gone
    Northwest Airlines – gone
    National Airlines – bankrupt
    Value Jet – bankrupt
    Air Florida – bankrupt

    American Airlines – hanging by their fingernails
    United – same as AA
    Delta – Same as AA

    I probably missed a few, but looks like the instructor was correct.

  31. WSKJ says:

    February 9, 2021

    OT or as I prefer to think, always On Topic:

    “Trust is the coin of the realm” _

    RIP George Schultz

  32. Drunk Gambler says:

    Before the Renaissance there was a Plaque.
    Elite just decided to live a little, as long as they are not dead. That’s how major restart in the world of Art is started.
    Most of us, will probably have similar thoughts, after Pandemic.
    I always wanted to see Rome, for example, so screw it, I’m going this weekend. Next thing you know – we have Boom in Traveling Industry .
    I can be wrong, of course…
    But what if ?!

    • Wolf Richter says:

      Yes, leisure travel will definitely recover. It might take a while, but it will recover.

      But business travel – the most lucrative segment for airlines – is now considered at risk of a permanent change because corporate cost-cutters and executives have discovered that a lot of these meetings and conferences can be done just as effectively via video and tie up costly employees for only a few hours instead of three days.

  33. wizzo says:

    The sheep will be happy by stock market. Fiat currency does not matter. Wake up people and stand up to the BS. Grow some testicles. No protests unless your 401k takes a shit ? You all are tools

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