Important Principles For Government Aid To The Airline Industry

by Gary Leff

Mar 16 2020

What we care about as a society is that an airline industry exists. The reason for government intervention is to prevent economic contagion (the spread of one failure to another). That was the argument for bailing out banks during the financial crisis, and it doesn’t exist in the same dimension with airlines. Nonetheless the industry is an important one once we’re ready to recover.

However the planes will still exist. The airports and gates will still exist. Skilled pilots and mechanics will still need work. The only reason to intervene will come later, if at all. Once airlines are in bankruptcy the relevant question is if they keep flying. And that’s dependent on available new capital during the bankruptcy process. Shareholders should take their haircut first.

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Is Not Cutting Flights As Deeply As Competitors A Brilliant Strategy Right Now? [Speculative]

by Gary Leff

Mar 16 2020

The normal approach is to cut spending everywhere possible, from capital expenditures to labor. It’s harder to cut employee salaries but Delta is throttling down spend on contracting firms and consultants. It is parking up to 300 planes.

So far flight loads haven’t been as bad as you’d expect, overall think of planes as 60% full towards the end of last week. That’s probably higher than we’ll see going forward.

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United Airlines Tells Employees To Expect Job Cuts

by Gary Leff

united plane
Mar 15 2020

United Airlines sent out a press release this evening, a copy of a letter to employees under the signatures of outgoing CEO Oscar Munoz and soon-to-be CEO Scott Kirby in which they lay out how bad they expect the novel coronavirus to be for the business – and in the middle of the letter they reveal that it “no longer appears realistic” to “avoid [taking] steps that affect [employee] paycheck[s].”

The airline reports that this weekend they have been in discussion with its unions to reduce “payroll expense.”

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Insane: American Airlines Is Still Spending Money To Add Seats To Aircraft

by Gary Leff

Mar 15 2020

American Airlines has cut its international schedule by 75% and its domestic schedule by 30%. Load factors are dropping. People aren’t buying tickets. The one thing American Airlines has too much of is seating capacity. And the one thing American Airlines has too little of to make it through this crisis is money. That’s why they’re running to the government for assistance.

And yet they’re continuing their ‘Oasis retrofit’ program where they replace the interiors of domestic aircraft to add seats to planes, making them less comfortable for passengers.

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American Airlines Parking Jets, Down To 3 Long Haul Routes, Cuts Domestic By 30%

by Gary Leff

Mar 15 2020

American Airlines, slow off the dime in its moves to protect its business compared to United and Delta, already began major capacity cuts in response to the administration’s ban on non-U.S. residents entering the country if they’ve been to Schengen Area countries of Europe within the past 14 days.

With the government extending that restriction to the U.K. and Ireland, and with demanding drying up more and more each day, they’ve now taken things a step further. They are reduce international capacity by 75% year-over-year. Ostensibly this will apply March 16 to May 6, but many of these cuts will almost certainly last longer.

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How To Get Most Of Your Money Back Even Though Hertz Won’t Refund Prepaid Reservations

by Gary Leff

hertz rental car desk
Mar 15 2020

Airlines are offering travel credit for cancelled reservations. Hotels are letting customers with prepaid reservations cancel without penalty. It’s frequently not possible to travel, either because of a government ban or an employer’s policy. The events or activities you planned to go to may not be happening – all of the world’s Disney theme parks are closed, even. Yet Hertz is keeping your money from prepaid car rental reservations.

Fortunately there is a hack to save some money if Hertz won’t offer a refund.

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Airport Immigration Insanity: We’re Cramming Everyone Together Body-To-Body

by Gary Leff

Mar 15 2020

The U.S. is limiting international travel and funneling it through a limited set of airports. That’s supposed to allow them to screen passengers better entering the country. Here the government is failing and making things worse.

The virus is already here and spreading. We don’t know how badly because we are keeping out foreign tests. Our solution to that appears to be keeping out foreigners and forcing everyone in close proximity to each other to encourage spread.

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United Won’t Refund Customers With International Schedule Changes FOR A YEAR

by Gary Leff

united planes runway
Mar 15 2020

This is United’s fourth refunds policy change in just a week. If they change your international flight by 6 hours or more they will give you a credit for the amount of your ticket. If you don’t use the credit within a year then and only then are you eligible for a refund.

As recently as March 6, United offered refunds if they changed your schedule two hours or more.

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