Airlines, struggling with COVID-19 headwinds, tally their 2020 financial losses
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American Airlines and Southwest reported financial results Thursday. And, it will not surprise you to hear, both airlines had a terrible year. In the words of American’s CEO, Doug Parker, it was “the most challenging year in our company’s history.”
Now with vaccines starting to roll out in the U.S. and a growing number of countries, will more people consider traveling in 2021?
When the pandemic started, air travel dropped more than 95%.
Though it has come back some, Richard Aboulafia, an aviation analyst at Teal Group, said 2020, for airlines, “was the worst year they faced pretty much in the history of the jet age.”
Airlines and analysts expect 2021 will be better, but how much better really hinges on the vaccine rollout, said Saikat Chaudhuri at the University of California, Berkeley. “When vaccines came out, there was a lot of optimism and excitement that there’s a light at the end of the tunnel, and 2021 would mark this rapid era of strong recovery.”
That excitement has already receded, in part because of how slow the vaccine rollout has been so far, said Edward Russell, who covers airlines for Skift and Airline Weekly. “The high infection rates that we have seen over the last few months, coupled with the new administration that probably rightfully wants to implement new restrictions to slow the spread, has really tempered the outlook,” Russell said.
Including the new requirement that everyone flying in from abroad now has to show proof of a negative COVID test.
Industry analyst Robert Mann said all those factors will likely mean a slower-than-expected recovery for air travel in the first half of this year, but “the back end of 2021, I think under all realistic scenarios, should look a lot better than we initially planned.”
For domestic air travel, anyway.
A real rebound for international travel, Mann said, could still be another year or more away.
COVID-19 Economy FAQs
What’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
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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