Despite the bullish news surrounding Pfizer's COVID-19 vaccine earlier this week, lifting airline stocks to the stratosphere, on hopes of a recovery in the severely beaten down travel and tourism sector, an industry group warned Thursday about the dire situation still facing many airlines.
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Airline For America's CEO Nick Calio, speaking at a conference Thursday morning, said air travel demand is "softening" late in the year. He said some of the reasons for the slump could be due to the resurgence of the virus pandemic.
*US AIRLINE DEMAND IS SOFTENING, AIRLINE LOBBY GROUP CEO SAYS— zerohedge (@zerohedge) November 12, 2020
The daily number of passengers screened at TSA checkpoints in the U.S. from March 2019 to November 2020 remains halved from early March levels. As the second wave of the virus pandemic ravages many parts of the U.S. - what appears to be happening in the chart below are lower volumes of daily passengers screened at TSA checkpoints that peaked on Oct. 18.
Calio said airlines' Thanksgiving-week capacity could be down as much as 39% from a year ago, compared with a 47% drop in the first half of November. It was also noted that corporate air travel in the US remains 86% below 2019 levels.
He said airlines could ax upwards of 90,000 workers this year as many carriers must reduce costs to survive the downturn. A muted recovery so far and waning revenues have left airlines in a precarious position - where they're quickly running out of cash. At the moment, airlines are burning through $180 million per day, with only enough cash through 1Q21.
*US AIRLINES EXPECT DAILY CASH BURN TO CONTINUE THROUGH 1Q 2021— zerohedge (@zerohedge) November 12, 2020
*US AIRLINES: SITUATION STILL DIRE, DAILY CASH BURN AT $180 ML
In October, the International Air Transport Association (IATA) warned that global airlines are on track to lose nearly $130 billion this year - significantly more than June's estimates of $84 billion.
IATA has already said the virus-induced downturn has resulted in 30 or 40 airlines having failed or restructured in bankruptcy.
IATA analysis shows airlines have about three-quarters of cash on hand at the current burn rate. With airline passenger volumes still down 65% in October from last year, airline ticket prices have crashed, increasing worries that airlines' revenue streams won't be enough to service existing debts.
To survive, some airlines, such as Emirates, the largest commercial airline in the UAE, have converted some of its passenger jets into "mini-freighters" to haul medical supplies worldwide.