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A Quarter Everyone Wants to Forget

Madhu Unnikrishnan

July 31st, 2020 at 12:53 PM EDT

In the Aug. 3, 2020 issue of Airline Weekly, we’ll take an in-depth look at the U.S. airline industry’s second-quarter results. It’s not pretty. As we all know now, the quarter started terribly, with a ghastly April. Airlines were hopeful that travel would start to recover over the summer, and it did start to rebound in May and June. Then the coronavirus began rampaging in parts of the country that had been relatively unscathed, including the all-important leisure market of Florida.

So what’s in store this autumn? Brett “The Cranky Flier” Snyder, who will be a guest on our Mon., Aug. 3 livestream, answered with an expletive. We don’t have a crystal ball, but we tend to agree. Throughput at Transportation Security Administration (TSA) checkpoints appears to have plateaued. It rose through May and June, but the last two weeks have seen the first week-over-week declines since the pandemic started.

Airlines have signaled what they expect. Today, Delta bid goodbye to 17,000 employees — almost 20% — who opted for voluntary separation. It may still have to furlough employees after Sept. 30, when the CARES Act strictures on furloughing employees expires, CEO Ed Bastian warned. United in a memo to pilots said it may need to reduce its pilot ranks by one-third. Southwest has said it will be 25% smaller, as it expects that roughly that many employees will leave the company or take leaves of absence. And Hawaiian sent its pilots a notice that more than 200 could be furloughed.

Without more Congressional payroll support, there will be thousands of furloughs and layoffs on Oct. 1. Southwest CEO Gary Kelly has joined the chorus calling for more federal payroll support, but whether Congress has the appetite for it remains unclear today.

So one thing is clear: It will be a smaller industry in the U.S., with fewer airline employees and fewer flights. If demand starts to return, airlines say they can quickly spool back up by recalling furloughed employees or those that have taken extended leaves of absence. But if demand continues to crater, every CEO has warned that there could be even more reductions in force than originally planned.

In other words, when CEOs say the pandemic is a crisis unlike any other in the airline industry’s century of existence, they’re not wrong.

Madhu Unnikrishnan

July 31st, 2020 at 12:53 PM EDT

Photo credit: Airplanes at McCarran International Airport in Las Vegas.  Flickr / Tomas Del Coro

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