Clouds rise as confidence returns to collapsed airline industry | World Weekly

It’s been a string of bad news for Heathrow chief John Holland Kaye over the past 18 months. His airport has lost nearly £3 billion since the pandemic began and stations have grounded, while he has been involved in frantic government pressure to reopen UK borders.

But in the past few weeks, the black clouds hanging over the flight seem to be rising to at least reveal cracks in the blue sky, prompting Holland Kay to convene airlines and ground staff with a new message: Make sure you’re ready for their flight to bounce back in the coming months.

“I think we’re out of the phase where we closed the doors,” he told the Financial Times.

That cautious optimism is slowly spreading across large parts of the devastated airline industry, which has suffered its worst crisis ever as one of the sectors hardest hit in the pandemic, as executives bet on vaccines and an easing of travel restrictions paving the way for a recovery.

Confidence is building fastest in the US as airlines begin reporting profits thanks to a booming domestic market, while in Europe, the new upbeat mood has prompted regional airlines such as easyJet and Ryanair to plan an increase in their flight schedules during the late summer. .

“We are in the midst of an unprecedented recovery,” American Airlines CEO Doug Parker told analysts on his latest quarterly earnings call.

Willie Walsh, the former head of British Airways owner IAG who runs the global airline trade body Iata, added: “The recovery has definitely started in the second half, there are signs that things are improving, restrictions are loosened or removed, and we have to take the positives from that.”

It’s a sharp change in fortunes for an industry hit by the pandemic as global airlines lost a combined $125 billion in 2020 and are expected to lose another $48 billion this year by IATA.

Although optimism mitigates an uneven recovery that has been slow in parts of the world with limited access to vaccines and an awareness that new variables can reflect expectations, the outbreak of positivity is underpinned by the increase in the number of planes in the sky and the easing of restrictions.

Since May, the number of planes in the air has steadily risen to the highest global level since the crisis began, according to data from Citigroup, while easing restrictions and signs that governments are moving toward living with Covid in key markets are at the heart of new markets. trust.

The UK has significantly relaxed travel restrictions for vaccinated travelers. Even Singapore, the child poster of strict restrictions to contain the virus, said this week that it aims to implement travel without quarantine for people vaccinated in September.

In Europe, a surge in bookings in late summer, spurred by an EU-wide digital travel card obtained at the beginning of July, has fueled optimism, confirming hopes of airline executives that the desire to travel has not been dampened by the pandemic.

“What we are seeing experimentally is that there is nothing wrong with the consumer,” said Josef Faraday, CEO of Hungary-based Wizz Air. “We think the desire to travel is completely intact.”

The low-cost, no-frills airline forecast a full return to pre-pandemic 2019 levels of aviation in August, putting it at the forefront of a recovery, led by short-haul carriers, which are spreading across Europe this summer.

But even some older airlines, hampered by the slow return of long-haul and business trips, are showing signs of optimism. For example, air carrier Air France-KLM said it was confident it would return to profits this quarter.

In the US, the speed of the recovery has taken the industry by surprise, with demand for domestic airline slumping so quickly that some flight crews have been left asleep due to baggage reclaims, as airlines fail to find enough hotels, according to unions.

There was also a fuel supply shortfall at some airports, while American Airlines had to cancel hundreds of flights after not enough pilots to keep up with demand for flights this summer.

Global airlines have suffered huge losses in recent quarters

They are issues the industry will happily grapple with as three of the “Big Four” US carriers reported profit in the second quarter, and the extreme company, United, predicted it would return in profits as well by the second half.

Another big plus are early signs that business trips, one of the last areas of recovery, are starting to pick up, while Boeing said on Wednesday it will cut 10,000 jobs than it expected in October as the market recovers.

Even the rapid spread of the delta variant in a large vaccinated population, and some companies closing their offices again, did not dampen enthusiasm.

However, with the US borders closed to most people from the UK and Europe, the industry awaits the complete reopening of the transatlantic routes – among the busiest and most lucrative in the world. It’s worth about £9 billion a year in revenue for US and UK airlines, but has been stagnant at around 25 per cent of regular flight volumes for more than a year.

“We are on the verge of losing another peak summer season in an important transatlantic market,” said Iata’s Walsh.

After 18 months of pain, many airlines in the world believe the worst is over. © Hollie Adams / Bloomberg

The recovery is also strongly biased towards the well-fortified Western world, with flight volumes still 40 percent lower than normal in Africa, the Middle East and Asia Pacific. Many countries that do not have the luxury of high vaccination rates to cope with the delta variant are now in the grip of the worst outbreaks of the epidemic to date.

In Asia, the huge Chinese domestic market, which has fully recovered to some extent, is misrepresenting the region’s overall figures, which are worse than the headline figures suggest.

“The already bad situation has been exacerbated recently by new Covid-19 infections across the region due to the delta variant, with continued restrictions at the borders preventing any meaningful restart,” said Subhas Menon, Director General of Asia Pacific Airlines. .

He added that hopes for a recovery would be “dim” until governments speed up the introduction of a vaccine.

Even as well-fortified Singapore begins to look at a gradual opening up, New Zealand has closed its “trans-Tasman travel bubble” with Australia. Motivated by the outbreak in Australia, he asserts an industry is at the mercy of changing government policy.

Small multiple chart showing passenger numbers in North America and other regions

Meanwhile, Australia’s Qantas still expects a loss of more than $1.5 billion in fiscal 2021, despite government support and a strong local road network.

In particular, persistent concerns about new variables mean that CEOs everywhere are realizing that conscious optimism may suddenly evaporate.

“Obviously we’re on an upward trend, but I’m not sure it’s going to be a straight line like we all wish it was,” said Wizz’s Varady.

But after 18 months of pain, many of the world’s airlines believe the worst is over.

“We have come to the light at the end of the tunnel,” said Louis Gallego, CEO of IAG, which owns the BA.

Source link