The Third Quarter by the Numbers

Madhu Unnikrishnan

January 11th, 2021 at 6:14 AM EST


Another quarter in a year everyone will want to forget. Last year’s Q3 numbers are grim but show some interesting trends. Asian airlines led the recovery, reporting the least-bad numbers of the lot. Low-cost carriers did reasonably well, as leisure traffic leads the recovery. And carriers with strong cargo operations did better than others. In fact, Asiana reported a small profit, largely on the strength of freight.

The numbers are instructive, but we’re reaching a point when the year-over-year comparisons will become less useful. Through Q4 and the full-year 2020, which airlines will begin reporting this month, comparisons to pre-pandemic results will illustrate just how hard the Covid-19 pandemic hit the airline industry. The pandemic’s effects were starting to show up in last year’s Q1 earnings. But the “comps” will be useful in one way: They’ll provide an easy way to track the recovery over the coming years.

Q3 Earnings Scoreboard

By Revenues (in $m)  By Net Profit (in $m)  By Operating Margin  By Net Margin  
China Southern$3,824 Asiana$2 Juneyao 3%Asiana0%
American$3,173 Juneyao ($2)Spring Airlines2%Juneyao 0%
Lufthansa $3,093 Spring Airlines($4)Ryanair1%China Southern-1%
Air France/KLM$2,935 Air Arabia($12)Asiana1%Spring Airlines-1%
Air China$2,726 Jazeera ($18)Korean Air 0%Ryanair-2%
Delta$2,645 Air Astana ($22)China Airlines-1%China Airlines-3%
United$2,489 Chorus/Jazz($25)China Southern-2%Turkish Airlines-9%
China Eastern$2,489 Ryanair($26)Turkish Airlines-4%Air China-10%
Southwest$1,793 China Airlines($28)Chorus/Jazz-4%China Eastern-13%
All Nippon$1,603 China Southern($28)Air China-10%Air Arabia-15%
Turkish Airlines$1,528 Mesa Air($29)Wizz Air-11%Chorus/Jazz-17%
IAG$1,441 Sun Country($30)Mesa Air-16%Aegean-18%
Korean Air $1,304 Aegean($33)Aeroflot -17%Jet2-23%
Ryanair$1,222 VivaAerobus($33)China Eastern-17%Wizz Air-23%
Hainan Airlines$1,179 SpiceJet($49)Air Astana -18%Korean Air -25%
Singapore Airlines$1,167 Bangkok Air($51)Air Arabia-20%Air Astana -26%
Japan Airlines $1,115 Jeju Air ($56)Aegean-22%Aeroflot -26%
Aeroflot $1,110 Allegiant($69)SkyWest-25%Mesa Air-27%
China Airlines$908 Jet2($87)Sun Country-31%Allegiant-34%
Alaska $701 Wizz Air($102)SpiceJet-36%SkyWest-34%
Asiana$615 Volaris($107)Jet2-37%SpiceJet-35%
Air Canada$569 AirAsia X ($119)Allegiant-39%Sun Country-39%
LATAM$513 Copa($122)VivaAerobus-41%VivaAerobus-40%
JetBlue$492 Aeromexico($131)Air France/KLM-41%Air France/KLM-42%
SkyWest$457 Turkish Airlines($132)Hainan Airlines-47%IndiGo-44%
Wizz Air$442 Frontier($143)Volaris-47%Hainan Airlines-49%
Juneyao $435 Cebu Pacific($145)Lufthansa -47%Volaris-50%
Spring Airlines$403 El Al($147)IndiGo-52%Lufthansa -51%
Spirit$402 SkyWest($156)Spirit-62%Spirit-54%
Jet2$380 Philippine Airlines($160)Frontier-70%All Nippon-54%
IndiGo$368 IndiGo($161)All Nippon-72%Alaska -57%
SAS (Aug-Oct) $345 Hawaiian($173)Alaska -75%Japan Airlines -57%
Frontier$245 Spirit($215)Aeromexico-77%Frontier-58%
TAP Portugal $227 Azul($226)Gol-78%Aeromexico-62%
Garuda$222 Gol($226)Singapore Airlines-79%Southwest-65%
Volaris$215 Finnair ($232)Japan Airlines -80%SAS (Aug-Oct) -74%
Aeromexico$212 TAP Portugal ($243)Philippine Airlines-81%Singapore Airlines-76%
Avianca $207 SAS (Aug-Oct) ($256)SAS (Aug-Oct) -83%Delta-79%
Allegiant$201 Air China($270)Azul-83%American-89%
Gol$181 Avianca ($271)Southwest-88%Jazeera -92%
Aegean$180 Norwegian($292)Delta-89%Philippine Airlines-92%
Philippine Airlines$173 Aeroflot ($299)TAP Portugal -94%United-95%
Azul$149 AirAsia ($312)Avianca -95%JetBlue-97%
Chorus/Jazz$148 Korean Air ($325)IAG-105%IAG-98%
SpiceJet$142 China Eastern($331)Jazeera -107%TAP Portugal -107%
Norwegian$139 Alaska ($399)American-107%LATAM-112%
Thai Airways$119 Garuda($431)United-108%Jeju Air -112%
Finnair $113 JetBlue($477)LATAM-110%Gol-125%
Mesa Air$108 Thai Airways($518)Jeju Air -118%Avianca -131%
AirAsia $92 LATAM($574)Bangkok Air-127%Air Canada-134%
Air Astana $85 Hainan Airlines($581)JetBlue-128%Azul-152%
VivaAerobus$83 Japan Airlines ($636)Air Canada-129%Bangkok Air-176%
Air Arabia$80 Air Canada($760)Norwegian-151%Garuda-195%
Sun Country$78 All Nippon($863)Garuda-156%Finnair -205%
Hawaiian$76 Singapore Airlines($891)AirAsia -165%Norwegian-211%
Jeju Air $50 Southwest($1,173)Finnair -171%Hawaiian-227%
Cebu Pacific$41 Air France/KLM($1,242)El Al-277%AirAsia -338%
El Al$39 IAG($1,408)Hawaiian-287%Cebu Pacific-354%
Copa$32 Lufthansa ($1,577)Thai Airways-310%El Al-374%
Bangkok Air$29 Delta($2,096)Copa-330%Copa-375%
Jazeera $20 United($2,374)Cebu Pacific-336%Thai Airways-435%
AirAsia X $14 American($2,818)AirAsia X -712%AirAsia X -837%

Source: Airline Weekly analysis of company reports.

Will the Pandemic Result in More Airline Consolidation?

  • A Reuters story raised some eyebrows this week when it suggested that there could be more consolidation at the top of the U.S. airline industry. The article argued that, given market conditions,  it would make “financial sense” for some combination of Delta, United, American, and Southwest to merge. Through its bailouts, the government owns a stake, so to speak, in the major airlines and could turn a blind eye to antitrust complaints if the recovery continues to be anemic, the article predicts. Despite the extraordinary circumstances, it’s hard to imagine the government allowing more consolidation. Even the Alaska-Virgin America merger a few years ago was thought to be a march too far. It’s unlikely that any of the top four carriers would be allowed to merge, but there may be scope for smaller airlines to join forces, industry analysts Airline Weekly spoke to say. But whether that happens this year remains to be seen.
  • One upside to the pandemic — if there is such a thing as an upside to a pandemic — is that 2020 was one of the safest years in aviation history. There were fewer than half the number of fatal commercial airline accidents in 2020 compared with 2019, according to the Aviation Safety Network.  The number of fatalities increased, attributable to the loss of a Ukrainian aircraft in Tehran and a Pakistani accident last year.
  • Amsterdam’s Schiphol Airport reported 2020 traffic was down 71% compared with 2019, to 21 million passengers. The total number of aircraft movements fell by more than half to just under 230,000. The number of destinations fell by much less, to 316 from 332. Schiphol hewed to trends in another way: The number of cargo flights rose by 68% to 23,782, but the amount of freight handled fell by 9%, due to less belly-hold capacity.
  • France could recapitalize Air France-KLM to help it adapt to a post-Covid world, the country’s transport minister said in a television interview. The deal would be contingent on reaching an agreement with the Dutch government and on the company’s future strategy. Air France has received more than $8 billion in government assistance since the pandemic began.
  • India’s Tata Group is getting serious about acquiring beleaguered Air India. The Tatas launched Air India in the 1930s, but it was subsequently nationalized. The Indian government is expected to announce which bidders advance to the second phase of bidding for the Air India divestment. Meanwhile, the Tata Group has increased its holding in AirAsia India to 84%.
  • The European Union and the UK have reached their Brexit trade deal, and airlines are allowed to continue operating more or less as usual. But ownership rules could pose a problem. Although the UK is allowing airlines to continue to operate even if they are not majority-British owned, EU rules require airlines to be majority-owned by EU nationals. Companies such as IAG, easyJet, Wizz Air, and Ryanair have made or are in the process of making structural changes to comply with European regulations. Now, the UK has to negotiate bilateral agreements with individual EU member states for non-scheduled flights and cargo.
  • The blockade of Qatar came to an end, which means Qatar Airways once again can fly direct routes over several Middle Eastern countries. The yearslong blockade by Saudi Arabia, the United Arab Emirates, Bahrain, and Egypt over Qatar’s relationship with Iran and its promotion of its Al-Jazeera news network, among other issues, resulted in Qatar Airways having to fly circuitous routes in the region to operate its network.
  • U.S. Transportation Secretary Elaine Chao resigned abruptly the day after pro-Trump rioters stormed and occupied the U.S. Capitol on January 6. “Yesterday, our country experience a traumatic and entirely avoidable event as supporters of the president stormed the Capitol building following a rally he addressed,” Chao wrote in a message to department employees posted on Twitter. “As I’m sure is the case with many of you, it has troubled me in a way that I simply can’t set aside.” Chao called her tenure at the department “the honor of a lifetime.”

    Although lauded as a competent public servant — Chao previously served as Labor Secretary — her record on aviation issues has been thin, the industry has said. Air traffic control modernization did not advance meaningfully during her time, and she came under fire last year for refusing to issue a mask mandate for airlines and other modes of transit. In her message, Chao urged DOT employees to work with Secretary-designate Pete Buttigieg, whom Biden said he would nominate to the role in December.
  • In other U.S. government news, President-elect Joe Biden named Boston Mayor Marty Walsh as Labor Secretary-designate. Prior to the mayoralty, Walsh served in the Massachusetts state legislature and led a Boston-area trade union. “Under Mayor Walsh, the Department of Labor will be well positioned to fight for working Americans who are the foundation of our great democracy,” the Air Line Pilots Association said. “As a former union worker, Mayor Walsh knows firsthand the challenges facing today’s workforce and ALPA is confident that he will remain a strong advocate for increasing labor opportunities.”
  • A Sriwijaya Air Boeing 737-500 crashed off the coast of Indonesia on Saturday with 62 people (50 passenger and 12 crew) on board. There are thought to be no survivors. Authorities believe they have located the flight data and cockpit voice recorders. The aircraft is reported to have been more than 26 years old, but it had no known maintenance issues.

Madhu Unnikrishnan

January 11th, 2021 at 6:14 AM EST