Airlines face ‘survival test’ on recovery delayed by virus

Bloomberg

The resurgent Covid-19 pandemic is pushing back the recovery in air travel, turning winter into a survival test for carriers now pinning hopes on a spring rebound.
Airlines are urging governments to introduce more testing and travel bubbles to help spur demand. The industry is on track to burn through an estimated $77 billion in cash the second half. The International Air Transport Association has called for fresh government support, while stressing the safety of flying.
The pain is evident across the globe, where airlines have rescinded earlier forecasts that called for traffic to gradually increase toward normal levels during the fourth quarter. Instead, carriers are retrenching and shoring up their finances.
Hong Kong’s Cathay Pacific Airways Ltd will slash more than 5,000 jobs and close a regional carrier to reduce its cash burn. British Airways parent IAG SA no longer expects to break even during the last three months of the year and has slashed capacity. American Airlines authorised the sale of $1 billion in shares as it burns up to $30 million a day this quarter.
One exception is in China, where the pandemic is in check and domestic flights have surged past where they were a year ago. In the US, airlines carried 1 million passengers on a single day for the first time since March. Still, air travel is at about the level it was more than three decades ago.
“It is still very unclear as to whether China is a model for what recovery will look like in other short- to medium-haul markets such as the US or Europe, or whether aspects of its geography and culture make it different,” Nick Cunningham, an analyst at Agency Partners, said.
Whether other markets follow will factor into the pace of the rebound for planemakers Airbus and Boeing.