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Analysts and Airlines Depressed on Air Travel Recovery

Analysts and Airlines Depressed on Air Travel Recovery
Joe Cortez

After airlines painted a grim picture of what the future may hold, Wall Street is growing concerned about the aviation sector recovery. A Cowen survey says flyers feel like it could be seven months or more before they feel “100-percent save” aboard an airplane, while Delta says they are cautious about network growth plans.

Continued concern over the spread of COVID-19 is giving airlines and analysts worry that the sector may not return to 2019-level highs this year. A poll and subsequent analysis by Cowen show flyers may not be ready to get back on airplanes until early 2021.

Average Flyer Comfort for Getting Back on Flights: 7.5 Months

In the June 2020 Cowen survey, flyers were asked when they would feel “100-percent safe” boarding an airplane once again. According to analysts, the average answer was 7.5 months – a small increase from when the question was asked in May 2020.

In addition, 29 percent said it would be 12 months or more before they would feel “100-percent safe.” Only nine percent of those asked said they would feel safe traveling by airplane in two weeks.

The consumer sentiments, combined with recent statements from American Airlines and United Airlines, suggests the consumer aviation sector could be in for a long recovery. Cowen now predicts we may not see pre-COVID passenger load levels until 2025.

“There has been some optimism lately related to demand,” Cowen analyst Helane Becker writes, according to Seeking Alpha. “But we continue to believe it will take 3 to 5 years before we return to 2019 traffic levels.”

Because American Airlines and United Airlines are discussing layoffs once the CARES Act allows, the research firm says airlines are not expecting a “V-shape” recovery. Instead, the steep drop in passenger demand could be followed by a gradual recovery to previous highs, resulting in a “swoosh-shaped” model.

And while the Transportation Security Administration is screening more passengers per day compared to April 2020, the levels are nowhere near those from 2019. The most recent screening high came on July 2, 2020, when the TSA screened 764,761 passengers. The watermark is roughly 36 percent of the passengers screened on the same date 2019. According to Cowen, most of those flyers are traveling to tourist destinations, including Florida, Las Vegas, and the “Mountain West.”

Delta Expresses Worry About Increased COVID-19 Cases and Warns About Layoffs

Joining American and United in expressing their worry is Delta Air Lines, which is only operating 35 percent of its normal July schedule. The information was distributed to employees in a memo obtained by Reuters.

“The continued growth of the virus through the Sun Belt, coupled with quarantine restrictions being implemented in large markets in the northern part of the country, give us renewed caution about further schedule additions at this time,” Delta CEO Ed Bastian wrote in the communication, as quoted by Reuters.

The memo also agreed with Cowen analysis that airline recovery would be a very slow process, noting involuntary furloughs could be on the horizon. According to Reuters, Bastian asked Delta employees to consider taking a voluntary buyout package before July 13, 2020 to prevent job losses.

View Comments (5)

5 Comments

  1. edgewood49

    July 9, 2020 at 3:37 pm

    Joe your doing a great job on this Covid 19 and posting very responsible I commend you. It’s going to be a long time before we see any real recovery to airline travel especially international and even then no where near the numbers pre Covid 19. The huge issue we have is the number of people in the world versus standardized sanitation, certainly China is the largest culprit here. Until they change they way and what they consume we are in for more of these.

  2. nycityny

    July 10, 2020 at 8:49 am

    Until the USA gets Covid under control international travel will be dead for Americans. Most countries won’t allow us to enter even for those “brave” enough to fly. And with surges happening almost everywhere in the country now traveling domestically doesn’t seem prudent. I had planned a trip from NYC to Los Angeles in late June, figuring that Covid was down considerably in NY and had never been bad in LA. LA’s surge began right before I was to travel so I canceled the trip. America’s failure in handling the pandemic by instead promoting the economy is just prolonging the economic downturn. Dumb.

  3. BC Shelby

    July 10, 2020 at 12:03 pm

    …some states are now imposing quarantines and even travel band on states where cases are surging.

    My state of Oregon should do the same as until other states started relaxing restrictions too quickly and carelessly, we were keeping the curve in check to the point that back in April, we were able to send ventilators to hard hit New York City .

    Now the number of cases has been increasing Granted, like other states, Oregon has started to reopen, but we have been doing so on a more controlled basis with an emphasis on distancing and wearing face coverings. Last month, moving to the second phase in more rural areas was delayed two weeks with Multnomah County [Portland], the most populous in the state, being the last to move to “phase one” less than a month ago.

    As to the state of the airlines, I have a strong belief that some will not survive and that we will see further consolidation within the industry (including here in the States). I’ve already read stories about United (which has warned upwards of 36,000 employees they maybe furloughed) which have mentioned the dreaded “B word”. Also airlines/leasing companies have been cancelling orders for new aircraft in increasing numbers along with retiring others early (Delta recently announcing they will be retiring all their 777s) are more signs that the industry me be in deeper trouble than originally thought

  4. edgewood49

    July 10, 2020 at 1:04 pm

    While it is going to be very tough world wide for the airlines survival, with some already gone down and others being propped up by their governments, for now here in the US is’s different. Yes United sent out that notice remember they’re reminding everyone from employees to congress this is serious and what we may key word may have to do in the fall. I think the word ” redundancy’ will be widely used in the coming especially in the airline industry. Lost positions absolutely, I think here in the US there will be at least a 10% across the board lost of jobs and in the airline industry even more. The once feared pilot shortage has erased itself. Consolidation thats going to be a tough one whomever is merged will create a issue for DOJ. My guess is UA or AA are in trouble

  5. sdsearch

    July 12, 2020 at 8:47 am

    What a goofy question! They should not have asked “100%”, because no one who is not immune to this disease is likely to feel a chance of being “100%” safe around others. So a lot of people were probably just guessing about when they might have expect to have gotten a sufficient dose of a safe & effective vaccine as to “how many months out”.

    They should have asked “safe enough”. I felt “safe enough” to take a flight on Southwest (partly because of their policy of limiting seating per flight plus open seating) within my big state (California) this weekend, and partly because I had CE KN95 masks (which protect me to a decent degree from others, while cloth masks mostly protect others from me). But I would never have called taking this trip “100% safe”.

    And I only considered my flight “safe enough” because of behavior I took on my own, like waiting for a gap in the deplaning passengers before I even got up from my window seat (the initial rush of deplaning passengers was just as bad as pre-Covid), and waiting for a between-terminals train (to get to the terminal with the rental car shuttle) until the rush of passengers died down.

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