Apr 7, 2020 - Economy & Business

Airline industry braces for a forever-changed world

Illustration: Sarah Grillo/Axios

The airline industry got a $58 billion lifeline in the coronavirus federal aid package. But the path is unclear for these companies, whose operations and prospects will be forever changed by the global pandemic.

Why it matters: People may want to minimize travel for the foreseeable future. Investors, analysts and industry watchers are trying to determine how much airlines will need to spend — and how much more in lost revenue they'll see — while they adapt to the new reality.

The backdrop: Revenue and passenger loads have plummeted at an unprecedented rate for the U.S. airline industry, and no one knows what's ahead.

  • Major airlines' share prices have been cut in half since the global pandemic started to roil the stock markets.
  • One Wall Street analyst is withdrawing his price target for American Airlines altogether — a sign that the waters are so murky that taking a guess at where the stock could be by year-end isn't worth it.
  • "Even as Delta is burning more than $60 million in cash every day, we know we still haven’t seen the bottom," CEO Ed Bastian said last week.

Yes, but: Even when the economy comes back to life and social distancing measures are relaxed, huge questions for airlines will remain.

  • Will people fly at the rate they did before, particularly business travelers who have grown accustomed to holding meetings virtually? Will passengers be more skittish about packing together in tight rows of seats, and will carriers accommodate their concerns?
  • It's "possible that a number of airlines will have gone bust and uneconomic discounts will be necessary to attract demand back,” Olivier Ponti, vice president at travel-industry data firm ForwardKeys, told Reuters.

What to watch: Most of the major U.S. airlines — including American, Delta, United and JetBlue — submitted applications for federal aid on Friday, per CNBC.

  • It's still unclear how much each company requested, or what terms they'll have to meet in order to receive the money.
  • If any of the companies accept aid, the government has a right to take a stake in the businesses, but may opt for other forms of compensation. Treasury Secretary Steven Mnuchin gets the final say.

The bottom line: Airlines are fighting for survival, and an uncertain environment awaits them on the other side of the pandemic.

  • "We are not expecting to re-start the same industry that we closed a few weeks ago ... the industry processes will need to adapt," Alexandre de Juniac, CEO of International Air Transport Association, a global airlines group, said Tuesday.

Go deeper

Primary elections test impact of protests, coronavirus on voting

Election official at a polling place at McKinley Technology High School in Washington, D.C. Photo: Drew Angerer/Getty Images

In the midst of a global pandemic and national protests over the death of George Floyd, eight states and the District of Columbia held primary elections on Tuesday.

Why it matters: Joe Biden, the presumptive Democratic nominee, needs to win 425 of the 479 delegates up for grabs in order to officially clinch the nomination. There are a number of key down-ballot races throughout the country as well, including a primary in Iowa that could determine the fate of Rep. Steve King (R-Iowa).

Iowa Rep. Steve King defeated in GOP primary

Rep. Steve King. Photo: Alex Wroblewski/Getty Images

State Sen. Randy Feenstra defeated incumbent Rep. Steve King in Tuesday's Republican primary for Iowa's 4th congressional district, according to the Cook Political Report.

Why it matters: King's history of racist remarks has made him one of the most controversial politicians in the country and a pariah within the Republican Party.

Updates: George Floyd protests continue past curfews

Police officers wearing riot gear push back demonstrators outside of the White House on Monday. Photo: Jose Luis Magana/AFP via Getty Images

Protests over the death of George Floyd and other police-related killings of black people continued Tuesday across the U.S. for the eighth consecutive day — prompting a federal response from the National Guard, Immigration and Customs Enforcement and Customs and Border Protection.

The latest: Protesters were still out en masse even as curfews set in in New York City and Washington, D.C. Large crowds kneeled at Arizona's state capitol nearly an hour before the statewide 8 p.m. curfew, and a peaceful march dispersed in Chicago ahead of the city's 9 p.m. curfew.