The pandemic has decimated the wide-body fleets as long-haul travel has nearly stopped entirely.  The most expensive an airline can deploy has become an economic burden unless it is converted into an PPE carrier.  That was the good news.  As the pandemic slows across several regions, PPE demand may have peaked.  We see this is dropping freight prices.  That means the need for converted wide-bodies may have also peaked.  More are likely to head to the desert.  Even as some airlines are bringing back narrow-bodies for an expected traffic surge.  While some airlines are eager to “get back to work”, will travelers embrace low fares?

News moves fast these days.  And the news for travel isn’t good.  The WHO is says the “worst is yet to come“.  Despite everything airlines are doing to ensure the flight is as safe as possible, there are many “kinks in the Coke bottle” to give travelers pause.   The lines at check-in (even with touch less machines), the lines at baggage claim being two.  Since all it takes is a short exposure to catch something you definitely don’t want, is the public, desperate to emerge from any form of isolation, ready to fly?

As you ponder that question, here’s how bad things are among the airlines that operate wide bodies. It is easy to understand their desperation to get flying again and try to earn some revenue to offset the costs of these aircraft.  Even if it feels like there is, perhaps, a new dawn to summer travel, the economic damage to the airline industry is tremendous.

Even with massive state support, many will not emerge from the pandemic. Their costs probably cannot be covered because traffic won’t return fast enough.  Long haul markets are going to be last to open. How long can some airlines bleed?  The shown in our model below in red are parked and most still require payments. Those in green also require payments.

Select an airline to see how their fleet looked at the end of 1Q20.

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