American Warns of Weakening Demand
American Airlines filed an 8-K with a financial performance update this morning. In it, the airline said that demand was weakening and cash burn for the December quarter would be at the higher end of estimates. Other than that, how was the play, Mr. Lincoln?
In its own words, American said:
Like others in the industry, American Airlines Group Inc. (the “Company”) has seen a slowing in demand and forward bookings due to the recent acceleration of the pandemic.
Previous cash burn estimates for the fourth quarter were between $25 million and $30 million per day, and American says it will hit the higher end of that range unless something changes. Unfortunately, the only change we’re seeing is COVID case rates spiking higher and higher with no relief in sight.
U.K. Makes a Quarantine Exemption for Important People
The United Kingdom isn’t about to let a spiking pandemic get in the way of a long history of preferential treatment for important people. Starting Saturday, those “individuals undertaking specific business activity which would deliver a significant benefit to the U.K. economy” no longer have to quarantine when entering the country.
The U.K. is feeling awfully generous, because it’s also offering exemptions for performing arts professionals, TV production staff, journalists, and “recently signed elite sportspersons.” In other news, British Airways has convinced Tottenham Hotspur to sign 1,200,000 people to play for the team.
The UK says this isn’t expected to raise the risk of domestic transmission. To that, SARS-CoV-2 said, “hold my Pimm’s Cup.”
Delta and KLM Expand COVID Pre-Testing to Amsterdam Route
Delta and KLM announced they are partnering on a COVID pre-testing program that will apply to travelers arriving in Amsterdam from Atlanta. The good news? Travelers who participate will be exempt from the required 10-day quarantine upon arrival. The bad news? They have to self-isolate for 5 days prior to departure and take three COVID tests.
Similar to Delta’s recent plan to avoid quarantine on the Atlanta to Rome route, this program will still only apply for Americans who are permitted to enter the Netherlands on essential business and does not expand the pie. The testing regimen differs from the Rome program as follows:
- Take a PCR test 5 days before arrival in Amsterdam (as opposed to 72 hours for Rome) and then self-isolate until departure
- Take a rapid test prior to boarding at the Atlanta airport
- Take a PCR test directly upon arrival in Amsterdam
- No test is required when departing from Amsterdam back to the U.S. unlike in the Rome trial
The testing program will run on four flights per week (two by Delta and two by KLM) for three weeks. After that, the airlines hope to extend the program if anyone actually thinks this plan is worthwhile.
Delta to Offer Employees Weekly Testing, Warns of Soft Demand
Delta has sent a memo to employees saying that it will offer every one of them the ability to get tested for COVID-19 on a weekly basis. According to the memo, the Mayo Clinic advises that this could help reduce transmission up to 90 percent by catching asymptomatic cases early. It doesn’t appear that the tests will be required, but you know if you don’t do it, your coworker Sarah is just going to stare at you funny and whisper behind your back.
With tens of thousands of employees scattered around the world, the logistics of testing on a weekly basis is no small task, so Delta is breaking it into three different methods. Larger employee centers will continue to have on-site rapid testing available, now with expanded capacity. Smaller employee centers will have test kits provided at work, presumably requiring them to be mailed in for processing. All U.S. employees will also have the option of using at-home testing kits.
This is an effort to help reduce the spread and getting people flying again. At the end of the memo, Delta noted it too is seeing softness, with fourth quarter daily cash burn expected to be $1 million to $2 million above previous forecasts. This puts Delta in the $12 million to $14 million cash burn range per day, less than half what American is burning.
GOL to Resume 737 MAX Flights Next Week
Brazilian airline GOL is expected to be the first to put the 737 MAX back into regular scheduled service when it begins flying the airplane again on December 10.
At the end of November, Brazil approved the proposed revisions to the MAX software and allowed the aircraft to return to service. Since that time, GOL has been operating testing and familiarization flights with at least some of the seven MAX aircraft that were delivered to the airline before the grounding.
If GOL flies the airplane on December 10 in regular service, it will beat American Airlines by 19 days. In response, American said it would rip up its recently-signed partnership with the airline unless GOL sent over 100 cases of Guaraná Antarctica to apologize.
Airline Potpourri
- La Compagnie hasn’t flown for months, but it will return for three roundtrip flights over the holidays to connect Paris and Newark.
- Ryanair will open a new base at Treviso airport, near Venice.
- SAS has retired its last A340 and will auction off the engines to hair salons in need of new hair dryers.
- United has finished retrofitting its international 777s with Polaris seats.
- VietJet and Bamboo Airways in Vietnam are asking for state handouts.
- Virgin Atlantic is putting together a nice farewell for its 747 fleet for avgeeks in the U.K.
Brett’s Moment of Levity
Never in my life would I imagine that my hands would someday consume more alcohol than my mouth.