Monday, October 12, 2020

The worst is yet to come for the world’s airlines

If you say your summer holidays were lacklustre in an era of pandemic-induced staycations, spare a thought for the world’s airlines.

The industry typically earns about 40% of its profits in the third calendar quarter alone, as the surge in travel gives carriers the chance to finally fill up aircraft at prices that can pay off their wage, fuel and debt bills.

There were aspirations a while back that there might be enough of a recovery from coronavirus lockdowns in the three months to September to keep airlines’ heads above water. The 18% improvement in a Bloomberg index of world airline stocks in August was the best performance for the benchmark since it was first compiled 20 years ago.

Some hope. As the first chills of winter arrive, it’s increasingly clear that the industry is as deep in the hole as it ever was.

EasyJet was one of the carriers better placed to survive thanks to its low cost structure and strong balance sheet. Nonetheless, it’s in talks with the British government about a second slug of state support after a £600m state-guaranteed loan earlier in the year, a person familiar with the matter said. Philippines-based Cebu Air is raising $500m in bonds and preferred shares after the government ruled out taking over troubled airlines.

Malaysian-based discount rival AirAsia Group announced a restructuring of its long-haul affiliate AirAsia X last week while ceasing operations on its Japanese carrier. It also ended funding for AirAsia India, people familiar with the matter said. Its domestic competitor, state-owned Malaysia Airlines, is talking to creditors about a restructuring and one or other Malaysian carrier may fail by the end of the year, according to the country’s aviation regulator.

11/10/20 Business Live

To Read the News in full at Source, Click the Headline


Post a Comment