United Airlines has reported a shocking 70% drop in domestic reservation demand during the past few days and has said it will make additional cuts in the coming months to adjust to demand.
The net bookings for United Airlines (new reservations minus cancellations), have collapsed in both Europe and in Asia. Domestic net bookings are down 70% and gross bookings are down 25% at the time of this publishing.
The CEO of United Airline’s view of the Coronavirus situation is one of the ugliest yet. The airline and their competitors are rushing to cut costs and preserve liquidity until things improve.
A number of CEO’s for airlines in the United States are confident that they will weather this storm. Many airlines have multiple revenue streams like online shopping, co-branded credit cards, hotels, and more.
United Airlines has stated that they will cut flights in May by 20% and each month after that will be the same or larger until demand returns.
Airlines outside of the United States may not survive the Coronavirus crisis due to their weaker balance sheets or lack of cash reserves.
Cathay Pacific has asked it’s 27,000 employees to take 3 weeks of unpaid leave from work to help the airline stay afloat during this rough financial time with the Coronavirus.
In a video message to employees on Wednesday, CEO Augustus Tang told employees that the current situation is as grave as the 2009 financial crisis.
Cathay Pacific has announced a 90% reduction in capacity on flights to China, and a 30% reduction in other flights across the world.
Employees have been asked to take “special leave” between March 1st and June 30th. “Preserving cash is the key to protecting our business,” the airline said.
Korean Air issued a warning Monday that their survival is being threatened by the Coronavirus and the effects that the virus is having on the airline industry as well as Korea iself.
More than half of the countries around the world have blocked Korean tourists from entering, thus requiring Korean Air to ground 100 of the 145 aircraft in their fleet.
This grounding of more than half their fleet has resulted in a reduction of 80% of their international travel. This is extremely drastic compared to their last major cut, which was only 18% of their international fights during the 1997-1998 Financial Crisis.
In a memo issued by the company, they stated that if the outbreak continues for a longer period of time, the airline will have no choice but to fold.
The owner of Mexican airline Interjet is putting the airline up for sale. Miguel Alemán Velasco announced plans to sell his airline to help settle the large debt it has acquired in recent years.
Overall the company is heading in a positive financial direction, however, some recent issues are causing massive issues for the company from an operational standpoint.
- Rising oil prices
- Airport payments
- 22 Sukhoi Superjet Aircraft (only 5 of the 22 are operational)
Media reports have circulated about fellow Mexican carriers Volaris and Viva Aerobus preparing offers to buy the airline, however, Interjet has stated it is looking at a merger with an international airline.
The sale or merger of Interjet will not be an easy road due to its finances. Between heavy debt, loses of 500 million Pesos in 2018, and the rise in fuel prices, buying into Interjet is a risky proposition.
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AZAL Azerbaijan Airlines operates flights twice per week from New York’s JFK airport nonstop to Baku Airport in Azerbaijan. The flights are operated on the Boeing 787 aircraft in a two class configuration. The last scheduled flight from JFK will depart on September 30th with service ceasing after that.
No official statement has been given by AZAL, but this information was confirmed by airline insiders as official. This news is unfortunate, as I had the opportunity to fly on AZAL from New York JFK to Baku to Moscow about 2 years ago, and the flight was phenomenal! The seating was comfortable, the entertainment was good, and the quantity and quality of the food was impressive, not to mention the cheap ticket price!
AZAL will surely be missed by some, as I know it was a preferred choice of mine for flights to and around Central Asia.
This post will be updated more once additional details are known.