United has already warned investors that its first-quarter net loss will come to $2.1 billion, while its operating loss will be $1 billion. Analysts surveyed by FactSet project operating losses of at least $2 billion for the entire industry, which would be the first industry-wide quarterly loss in eight years. Every airline is expected to report a loss.
It’s a stunning reversal for an industry that had been enjoying the greatest period of profitability in its history.
Worst crisis in history
The number of people being screened by the TSA at US airports is down 95% so far in April compared with last year, after a 51% drop in March. Airlines are already slashing their schedules in May by as much as 90% and are warning that the depressed level of travel will continue into 2021, at least.
Help is on the way
Investors are looking for information on airlines’ long-term plans along with the bad first-quarter news, as well as any guidance on the second quarter and beyond.
The industry has a “forthcoming October day of reckoning,” wrote JPMorgan Chase airline analyst Jamie Baker in a recent note.
“We expect robust discussion on how much smaller fleets need to emerge post crisis,” Baker added. “This of course will inevitably lead to questions on how aggressive managements will be in downsizing labor on October 1 when the government handcuffs are unlocked. Unfortunately, we simply don’t see any way for most US airlines to avoid massive layoffs.”