The new airline thread

[MilitaryToFinance]

On 8/26/2020 at 2:16 PM, AirGuardianC141747 said:

The swing back into the cargo court specifically is repeated yet once again, reminiscent of post 9/11. Time will heal and the impacts will shape this industry quite a bit, but for now many will weather the storm. 

Not to be Debbie Downer but this is so much worse than 9/11 for the industry. After 9/11 RPMs dropped ~35% and were down ~30% for the next 5 months before slowly recovering from there. 6 months in right now and things are still twice as bad as the worst of the 9/11 shock. Yes the industry will find a balance and these numbers will improve but at what level and how many planes do we need today vs. a year ago? Now that the furlough protections from the Fed bailouts are going away I think things are going to get ugly even with the airlines getting more funding.

[AirGuardianC141747]

5 hours ago, MilitaryToFinance said:

Not to be Debbie Downer but this is so much worse than 9/11 for the industry. After 9/11 RPMs dropped ~35% and were down ~30% for the next 5 months before slowly recovering from there. 6 months in right now and things are still twice as bad as the worst of the 9/11 shock. Yes the industry will find a balance and these numbers will improve but at what level and how many planes do we need today vs. a year ago? Now that the furlough protections from the Fed bailouts are going away I think things are going to get ugly even with the airlines getting more funding.

Totally agree with you. My 9/11 statement was regarding the swing back to the air cargo worlds front doors for jobs. And I emphasized the reshaping of the industry with “quite a bit.” So now that you’re being very frank with graphs I will readjust accordingly and be more against the norm as most believe it would have clicked back by now or at least by Christmas. As your graphs indicate it’s basically still horrible. Vaccine or not it won’t snap back quickly at all. International flying is toast for 2-3 years and that’s not predicting pre-COVID levels that’s just a head above water survival rate and holding a profit and not booming. This will hurt much longer then initial thoughts.

[MilitaryToFinance]

Yeah I expected a slow recovery but this has been worse that I initially thought as well. The interesting thing about the daily graph, that is impossible to see in the picture, is the weekly cadence. The year over year declines is consistently worse on Tues/Wed compared to Thurs-Sun of the same weeks. So recreational travel flights are coming back faster than business travel that happens mid-week. Even with a vaccine I wonder how much that business travel will recover. Clearly it will snap higher than today because I talk to plenty of companies who complain that they really do need to go visit sites/customers/plants. But I'm attending a lot of conferences and meetings over Zoom that are more efficient for everybody than wasting a day or two traveling for the same meeting. Even when leisure travel comes back to "normal" if the high-paying business travelers aren't there the math gets tough for the airlines. Probably a good time for Jet Blue and Southwest, not so sure how American/Delta/United fare without raising ticket prices.

[AirGuardianC141747]

Agree as well, very well thought out. Here’s to us hoping for the best and everyone out there feeling this pain industry wise. Stay strong.

[Gazmo]

I think when we see the international market open back up travel going to explode. When it comes to the big three a lot of the domestic travel are connections to International locations. Parking hundreds of widebodies is what's killing us. This isn't just people leaving the states and coming back but people coming into the states and going back to whatever country they live in. That's huge. This isn't because everyone's afraid to travel it's because governments have shut the travel down. Now we all know things aren't going to open back up as quickly as they were shut down so yeah it's going to take a while, but I think if a lot of countries decided tomorrow that they were going to open everything back up again we'd see travel shoot up tremendously because people are ready to get back to normal life. There are a lot of young people out there who couldn't give a rats ass about COVID and are ready to travel. Not saying that's smart btw...

As far as business travel goes, yeah maybe some of it won't come back I'm sure there's enough of you who have been teleworking over the past 6 months to be annoyed with it already. I know I am. I've been after unit on days during this pandemic trying teleworks and it just isn't like doing it in person. For a lot of people the benefits of business travel are what attracts them to whatever job they do. Granted a lot of people probably don't like traveling for their job and being away from their family but for others they probably love to travel and would rather be doing that instead of sitting in front of a laptop looking at a 14 inch screen teleworking. With 3 billion people watching Youtube and porn, the internet and teleworking technology isn't exactly perfect all of the time.

[AirGuardianC141747]

Some more very well laid out points. I hope your right and I too believe it will come back just not near the levels it was preCovid.

Leisure travel when the doors open, definitely a spike if people haven’t spent their extra income/resources during this virus just to stay afloat. Visiting relatives domestically will launch, international travel is totally restricted and no doubt a spike will be seen but it will take awhile and definitely plateau eventually below preCovid as unfortunately elders have decreased, a ton of business loss and now our older generations including myself (still no Facebook though) have become waaaay more savy on social media tools due to necessity and not curiosity. Medical has almost done a 180 on the normal visitation/in house patient care. Doctors forced to do eScripts(3% usage rate before shutdown, 95%+ now)) vs the human touch provided by thousands upon thousands of care workers who traveled before. My neighbor was one of the M-Fri every week travelers... Not a trip since this began...

Businesses have learned more ways to conduct sales than ever before as they were forced assimilate and not the usual fat cutting measures done by the bean counters. This was a bean counters wet dream, now the Boss has been listening definitely more so. Nothing seems to be able to replace face to face and that will get back out there but doubtful it will ever be like it was. The entire world has just been reprogrammed from out-and-about to solitary confinement including simple ideas as face coverings - Reprogrammed. I would be itching to travel as well but the economics/Boss will decide what travel is really necessary and what can be done over the net with monumental cost savings such as air fare, hotel, rental car (they are hoping to survive), per-diem, etc. Big contracts only most likely. Travelers these past few months have been the bargain basement shoppers to include traveling with garbage bags, it’s insane and can’t believe I saw it several times. These aren’t the travelers we’re looking for, but beggars can’t be choosers. Being reliable and consistent is everything in this industry. Japan specifically indicated 1 year domestic at best, 3 years internationally at best was their forecast for basic profitability/survivability without cuts and initial growth. It’s all a crap shoot really as time will tell. Loads are tight here due to consolidation/less flights as everywhere else.

Brick and mortar has and will continue to disappear. No Building costs, insurance, taxes, cleaning requirements, electricity/water bills, etc, etc, etc. Telecommute is boring for some totally agree, but many especially the younger groups seem to thrive on it. Totally makes sense if you structure your work patterns during the day and not be enslaved to a cubicle or office. Execute your day with an ear piece has been the norm so much more than before. It’s Freedom for many depending on your situation, lifestyle, mentality. 
Definitely reprogrammed in so many ways, good, bad and the ugly. It’s seems to be a long haul.

*Just my take as I travel around and scan the environment on board aircraft and in the cities with all the for rent/for sale signs, nothing more. Totally 1 cent look.

 

 

[Lord Ratner]

2 hours ago, joe1234 said:

2 big reasons I disagree with your last paragraph: Let's be honest, the business world is filled with control freaks, and you just can't control an employee very effectively from behind a computer screen. It's hard for me to believe all those millions of hardass "you're fired if you show up 5 minutes late" managers will just be cool with the way things are now. So much business is done through conventions and face to face networking. So much of it has to be done in secrecy, or requires someone to be "boots on the ground" at a work site.

The second reason is, the market will adjust. Commercial rents will get cheaper if there's lower demand to balance. Service companies (like, say, a consultancy) trying to save on rent costs and insurance will have a clear competitive disadvantage to companies that are willing to fly people out and spend the money. Video and teleconferencing has been already been out for a long time --- there's reasons why it never really took over.

Yup. Human nature isn't so easily changed.

 

https://fortune.com/2020/09/14/jpmorgan-work-from-home-wfh-worker-productivity/

[Bigred]

Ever send an email to finance or comm and your issue get fixed right away? Compare that to going into said office and standing there in front of the person’s desk till it’s fixed? 
 

Virtual is good but it can’t replace the impact of face to face. 

[TreeA10]

Last 6 flights I flew between DFW-Narita or DFW-Paris, max passenger load was 43, min load was 20. 

[Day Man]

3 hours ago, TreeA10 said:

Last 6 flights I flew between DFW-Narita or DFW-Paris, max passenger load was 43, min load was 20. 

wow...are you supplementing at all with additional cargo (not even sure if that's a thing)?

[TreeA10]

4 hours ago, Day Man said:

wow...are you supplementing at all with additional cargo (not even sure if that's a thing)?

Yes, we are carrying cargo but I've not paying attention except for my last flight which was back from Paris. We had 24Klbs and someone said we needed 28Klbs to break even but I can't verify that. I'm flying a cargo only flight later this month to London and next month to Incheon so we'll see how those look. 

[Prozac]

I think there is definitely room for the pax guys to grab more cargo if they can find a way to fit it on the planes, at least for the long haul stuff. We are leaving dozens of cans in HKG every day and now flights are canceling due to aircraft and crew availability. We’re constantly leaving Asia stuffed to the gills. I haven’t left SZX, HKG, or ICN under 980K in months. From what I understand the freight costs are going through the roof. I would imagine you could fill the belly of a 777 or 787 out of Asia pretty easily right now. 

[Hacker]

17 hours ago, Prozac said:

I think there is definitely room for the pax guys to grab more cargo if they can find a way to fit it on the planes

Don't forget that, in the days/months between when international pax flying was shut down, and when the pax carriers decided they were going to conduct some cargo-only flights to keep the revenue stream open, the freight forwarding companies that were previously using the pax carriers still needed to move their product.

UPS and FX (and I have to assume Atlas, Kalitta, ATI, Western Global, Sky Lease, and anyone else who picked up that slack) were all in quite a position of power when those forwarders pivoted to them to move their freight. I know FX, at least, rather than just take on that business temporarily, signed multi-year contracts with those freight forwarders.

I'm sure there are smart business folks at the other cargo haulers as well who would have also penned longer-term relationships with the freight forwarders, rather than just picking up the work during COVID and allowing it to go back to the pax carriers when the capacity came back.

[HuggyU2]

"There's no money in cargo" - Rono Dutta, President, United Airlines, 99-02

[Prozac]

1 hour ago, HuggyU2 said:

"There's no money in cargo" - Rono Dutta, President, United Airlines, 99-02

lol 

[SocialD]

18 hours ago, HuggyU2 said:

"There's no money in cargo" - Rono Dutta, President, United Airlines, 99-02

 

LOL, the same phrase was muttered by a former DAL (or NWA?) exec. when asked why they were dismantling the ANC freight hub.  I get to hear all about it every time we taxi past a cargo jet or a 747.   On one of my last walkarounds (pre-covid), there were pallets upon pallets of UPS boxes being loaded in the belly to go to AMS...guess we are (errr....were lol) making some money of cargo.  

[AirGuardianC141747]

Never said Face to Face will all go away. You are all definitely correct it can’t be matched on any or many terms and the face to face in discussion was actually traveling somewhere and not across the street to Finance or your local cable/satellite complaint departments. Here is the rub: When has anything like this ever happened like these 6 months now going on 7... Reprogrammed and cost cutting on extreme measures. Totally obvious why Zoom/Skype/Face Time, etc, etc, in business never took off earlier I thought = The World was FORCED into it. Just let me know if/when has it ever become a requirement like now. Has it been ever forced upon you like this? It will eventually loosened its grip and things will flow more and more back to face to face on the business side. Wouldn’t you agree the most important contracts will demand face to face, then others incrementally no doubt as mentioned before. I hope your right and even better than 90% of preCOVID levels will be attained. That would be awesome and definitely what everyone is shooting for, but once again everyone here chose technology prior to this debacle and now we were forced. There have been more losses than wins, more real estate closures than Grand Openings list goes on and on. Definitely business will thrive again no doubt, but to be at the previous levels or greater will take longer than most are willing to believe. Like nature finds a way, businesses that are surviving are finding their way. Seems easier to fall than climb for the most part.

Full Recovery by 2022, 23, 24, who knows. Here’s for having a far better 2021. At least it won’t be hard to beat for the majority.
Bottom line, it’s just a single perspective and if I am totally wrong and I want to be wrong, we all WIN BIG and I prefer it. 

 

Edited September 23, 2020 by AirGuardianC141747

[Hacker]

5 hours ago, SocialD said:

LOL, the same phrase was muttered by a former DAL (or NWA?) exec. when asked why they were dismantling the ANC freight hub.

To be fair, both of those statements/decisions were made in a pre e-commerce dominated western world, and before a lot of the political/economic changes in Asia of the last decade that are the ingredients of the current global flow of goods and money.

The whole foresight vs hindsight thing, and all.

[viperdreams]

Any of you retired medically? Finally able to hold a first class. How can I indicate in my resume that I retired due to medical but can finally hold first class after years of treatment? Only had 7 years of service, so don’t want people looking at my resume think anything negative before even talking to me.

[HuggyU2]

If you can hold a 1st class medical, that is really all you need to have.  Your background will certainly come up on the interview, however if you do not have a Dishonorable Discharge, it should have no bearing on your airline application.  

[TreeA10]

A couple weeks ago, someone asked about airlines carrying cargo.  I wish I knew what the break even was.  My last two flights:  DFW -LHR, 777-300, 400lbs (derringer pistol parts) going and 28K coming back.  DFW-ICN, 777-200, 0 (zip, nothing, nada) going and 48K coming back.  It was a different experience in a good way with no flight attendants and no passengers.

[the g-man]

400 lbs? Sounds like someone is load planning like TACC these days


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[Ryder1587]

I Know there are a lot of it depends in this question.  When do you all think hiring will start again for the domestic carriers ?  As of now the levels traveling compares to a year ago are around 30-35%. If a vaccine comes tomorrow do you think it will still be middle of next year or later for hiring ?  Worst case the vaccine doesn’t work. Maybe it takes 1-3 years before hiring again ?

[Prozac]

Hard to say. A couple years is probably a safe bet, but there have been a lot of voluntary early retirements and if demand picks up as a vaccine is distributed, the majors could be scrambling to fill their ranks again. I think a lot will depend on whether and how fast business and international travel recover. International could be slow depending on how individual countries decide to open up (or not) over the next year. Business travel is up in the air because it remains to be seen how zoom/telework will affect that segment. Freight will continue to hire as fast as they can train for the foreseeable future. Welcome to the crazy carnival ride called the airlines!

[NKAWTG]

Best guess...

Overstaffed in 2021

Voluntary time offs cancelled in 2022

Furloughs recalled in 2023

Min staffing/overtime pay in 2024

Hiring 2025?

 

Probably goes in that order, +/- a year or two.