Airlines can’t recover until people start traveling like normal
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These are really dark days for airlines, says Richard Aboulafia, an aviation analyst at Teal Group.
“Just like the rest of the economy, the airlines are effectively in a medically induced coma,” Aboulafia said.
Airlines are starting to receive government money: $25 billion is earmarked for grants and loans that require companies not to furlough or lay off workers. But Peter McNally, at investment research firm Third Bridge, says the airline’s losses this quarter show just how big their cash needs are.
“While the government funds were good and helpful, there’s still the uncertainty as to when we’re going to get back, and how long the government-provided liquidity will last,” McNally said.
Airlines are also turning to banks for loans, and selling aircraft and leasing them back to raise funds.
Delta is closing lounges, reducing hours, parking planes and cutting advertising. It says that will help it reduce its cash burn from $100 million a day to $50 million.
Delta CEO Ed Bastian, told investors on the company’s earnings call that it could be up to three years before it sees a sustainable recovery.
“The truth is, our recovery will be dictated by our customers feeling safe, both physically and financially, to begin to travel at scale,” Bastian said.
There’s a cautionary note on that consumer confidence from a new survey of fliers conducted by the International Air Transport Association.
Spokesperson Perry Flint says 60% of travelers said they’d go back to flying within a couple of months.
“But 40% indicate they could wait six months or more, and 69% indicated they could delay a return to travel until their personal financial situation stabilizes,” Flint said.
He says that in China, air travel has recovered slightly now that movement restrictions have been eased, but it’s still at a much lower level than before the pandemic.
COVID-19 Economy FAQs
So what’s up with “Zoom fatigue”?
It’s a real thing. The science backs it up — there’s new research from Stanford University. So why is it that the technology can be so draining? Jeremy Bailenson with Stanford’s Virtual Human Interaction Lab puts it this way: “It’s like being in an elevator where everyone in the elevator stopped and looked right at us for the entire elevator ride at close-up.” Bailenson said turning off self-view and shrinking down the video window can make interactions feel more natural and less emotionally taxing.
How are Americans spending their money these days?
Economists are predicting that pent-up demand for certain goods and services is going to burst out all over as more people get vaccinated. A lot of people had to drastically change their spending in the pandemic because they lost jobs or had their hours cut. But at the same time, most consumers “are still feeling secure or optimistic about their finances,” according to Candace Corlett, president of WSL Strategic Retail, which regularly surveys shoppers. A lot of people enjoy browsing in stores, especially after months of forced online shopping. And another area expecting a post-pandemic boost: travel.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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