The one thing airlines don’t want to admit is that things are almost out of their control and they won’t admit a thing until they have to.
United was listed as the one most likely to fail completely several weeks ago, its share price has risen from a low of $30 to $32 (it was $96 pre-Covid) on news of advance bookings, but is now in an almost equally sharp decline as Covid worsens the recovery chances. Its bonds are considered sub-junk and trade at a loss.
United has been relatively frank, telling staff that almost half of them, 36,000 will loose their jobs.
So while many saw United as floundering, it’s honesty about the situation and its future may have tamed expectations and brought some reality to bare.
Southwest is in an unusually precarious state for a previously solid airline. Bookings have collapsed, its already talking about feet reductions and redundancies. The rapid re-opening of states and the reckless behaviour of so many who won’t distance or use face masks, now a rapid re-shuttering of businesses and even potential lockdowns, have turned its bookings upside down – again.
And that brings us to American…its share price is a third of what it was – barely $11. Its struggling with its own arrogance, Doug Parker its CEO seems eminently out of touch with reality on a good day, never mind when things are bad.
It picked up a raft of bad PR on filling aircraft to capacity. One US senator was fuming about being shoved into a full 737 and wants to introduce a bill to prevent it, while just yesterday, American Airlines personnel allowed Texas Senator Ted Cruz to board without using a face mask – when everyone else was expected to wear one.
American Airlines feud with Boeing is a stark reminder of how precarious its finances are. Refusing to take a single aircraft unless Boeing financed it on favourable terms, is something even the other airlines haven’t done.
There are rumours, and I stress the rumours aspect, that American is the one having the most trouble paying for fuel and airport operations.
Of course rumours aren’t proof, but, and this is the issue, when a whole set of small, tiny, unconnected events, innocuous on their own, start to make themselves known, its like the background smell of smoke on a forest walk. You can’t see it, but you know it’s there, and flames are likely not far behind.
The chatter is American is the one floundering, the one to watch most closely. Yet even if it did fail, it would simply dive, once again into Chapter 11 and step out two years down the line, smelling of roses. Unlike those who work for it.