Economy
Related: About this forumThe Chilling Things Delta Said about the Airline Business.......
and this is Delta, the strongest of the Big 3.....
The Chilling Things Delta Said about the Airline Business, the 90% Collapse in Q2 Revenues, and Why Some Demand Destruction May Be Permanent
by Wolf Richter Jun 10, 2020
Shares go to heck after the mother of all revenue-warnings, plunge 20% in two days, including 7% after hours. Its disclosure confirms Buffetts decision to dump his airlines in mid-crash.
By Wolf Richter for WOLF STREET.
Delta Airlines came out with the mother of all revenue-warnings when it said in an SEC filing this morning that its revenues in the second quarter, ending June 30, would collapse by 90% compared to the second quarter last year.
In addition to the collapse of demand, it has experienced significant ticket cancellations (refunds are counted as negative revenues), and it has waved change fees, which used to be a big profit center, and it is giving out other refunds, and they all have negatively affected our revenues and liquidity, and we expect such negative effects to continue.
And it cannot predict the effects of this unpredictable future, not even the near-term effects. The longer the pandemic persists, the more material the ultimate effects are likely to be, Delta said. It is likely that there will be future negative effects that we cannot presently predict, including near term effects.
It added a slew of dismal data points and warnings, along with the hoops it has already jumped through and still needs to jump through to stay in business, including billions of dollars in help from the taxpayer. It was a doom-and-gloom report that not even a sworn doom-and-gloomer would have been able to imagine not too long ago. ............(more)
https://wolfstreet.com/2020/06/10/the-chilling-things-delta-said-about-the-airline-business-the-90-collapse-in-q2-revenues-and-why-some-demand-destruction-may-be-permanent/
captain queeg
(10,085 posts)But many wont. My question is for the airlines who got big hand outs (loans) from the govt stimulus; will they be able to declare bankruptcy and wash the slate clean? Congress made it near impossible to get out from under student loans, did they apply that thinking to corporations?
mopinko
(69,983 posts)worse fuels, spewed right into the upper atmosphere.
take the train people.
enjoy the ride.
buy the sleeper car.
Jirel
(2,013 posts)Air travel is not going away, though it will not recover for years, really not until sufficient immunity happens in the population, by whatever means.
If some airlines go out of business because they can not adjust to market forces that were already in play before the pandemic, let them. Others with better business models will rise up in their place. We have no reason to mourn for American, or Frontier, or any other Airline.
The pandemic will create many permanent changes, some of them beneficial. I doubt that all the people working from home will go back to the office, for example, as companies realize that they do not need expensive office space. Many stores and other businesses will go bust - not just due to some businesses being unable to operate at all during this time, but because many have overextended their franchises or locations, are not bringing anything of value to consumers that isnt being met better elsewhere, or have been unable to adapt to changes for years.
Some bad ideas and economic norms may also die, such as the corporate love of fungible low-paid, poorly educated employees. We may even break the cycle of America being the land of part-time minimum wage fast food workers all selling burgers to each other as a viable business model. Even now, were seeing which restaurants are reopening successfully, or staying in business successfully with takeout, as a function of the quality of employees they can attract and retain. Wages for some are going up, with better and more adaptive employers.
Lots of people out of work? Yes. Permanently or long term? Likely yes. Job prospects for people without at least high school diplomas and some strong vocational chops are going to be dim. Much as Im sorry for their individual suffering, this is both the result of a failed system that will have to be reformed quickly, and their families and their own bad choices in many instances. If youre an ignorance-loving redneck from a family of them, dont expect that your prayers and homeschooling will even get you a job at McDonalds in a post-pandemic world. That lot is the loudest about personal responsibility, etc. - now theyre going to have to deal with the consequences of the garbage theyve shoveled at others for years.
The post-pandemic world is likely to be more streamlined and resilient, and thats a good thing.
Buckeye_Democrat
(14,852 posts)We all have to spare the delicate feelings of the biggest idiots in this country, by not MANDATING stringent PPE for everyone, so the airlines will just need Bubba to finally travel outside of his little town for once.
peacebuzzard
(5,145 posts)Massive numbers of furloughs. For Delta it may be in the 50,000 employee loss range. Other airlines will go the same path.
At the moment thousands of airline employees are at home on unemployment and as soon as the restructuring plan for employees takes place the unemployment figures will be permanent job losses. I see no short term or even longer-term revival of pre-pandemic airline ticket sales. The air cargo sector will continue as normal or better.
sandensea
(21,595 posts)Nationalize.
It'll never happen though. Too many Faux viewers screaming 'Soshilism!'