Mon. Oct 18th, 2021


Warren Buffett does not admit many mistakes. The chief executive of Berkshire Hathaway reacted harshly when asked over the weekend about a সিদ্ধান্ত 4 billion decision in the US airline in May. “I don’t consider it a great moment in Berkshire’s history

Shares of American, United and Southwest Airlines have more than doubled in one year, and Delta’s share price has also fallen below 100 percent as a result of recent turmoil. Although most U.S. careers are still burning with cash, they are Is carefree enthusiast About the future. Southwest chief executive Gary Kelly said during first-quarter earnings, “US chief Doug Parker predicted the pace of recovery is accelerating.”

Across the Atlantic, Lufthansa CEO Carsten Spohr Trying to sound similarly enthusiastic. “We are looking to the future with some confidence and optimism,” he said. But he also had to reassure investors that “this unprecedented crisis is forcing us to overcome our known weaknesses, and it will make us stronger.”

Although they are affiliated with the alliance, the United States and European airlines are facing completely different status. The Covid-1p epidemic has widened the structural differences between the two markets, putting American carriers in a much stronger position to adapt to the fundamentally changed travel environment.

Passengers at Dেলsseldorf Airport. Outbreaks in Europe have dropped by 4 per cent since 2012, and slow vaccine rollouts have not helped Freedman Vogel / EPA

By 2019, North America was extremely profitable. Most of the big carriers used Chapter 11 bankruptcy to reduce costs. Fifteen years of consolidation have left the top five carriers (including Air Canada) with 75 percent capacity, allowing them to raise prices.

In Europe, cut-price operator Rainier has already reached the top five, a group that controls only 51 percent of capacity, and other low-cost carriers continue to hold their feet. Lufthansa, the father of British Airways, and the IAG are fighting over their own low-cost weapons, but they are still working. European flag carriers rely heavily on long distances and business travelers to make a profit.

Enter the epidemic. Global passenger traffic has dropped by two-thirds Last year, revenue-passengers were measured in kilometers, taking into account the number of passengers and the length of the aircraft. Carriers tapped government assistance programs, sold planes and scattered or let workers leave boats.

Winter lockdowns have spread hopes of a speedy recovery. Industry group ITA predicted last month that global demand for 2021 would simply return 43 percent of the 2019 level, And the industry as a whole will continue to lose money.

But drill down and a translatantic split will appear. US domestic demand is expected to hit the 2019 level in the second half, while domestic European demand is expected to decline Below 50 percent. And US airlines will narrow their loss-making revenue to 2.7 percent by 2021, and European airlines will post a 19 percent loss margin.

The rapid rollout of vaccines and the desire to see families scattered are encouraging Americans to start booking domestic flights as well as make some beach vacations in the vicinity. More than 1.6 meters People went through the screening at the American airport on Sunday, the most since March 2020. Inauguration, start It is the first new airline since 2007.

The situation is very different in continental Europe, where vaccines were slow to arrive and flights were down last week. 64 percent from 2019. Uncertainty over UK travel rules has forced Heathrow Airport Plan for This year 13m to 36m passengers anywhere, in 2016 it was less than m1m. Low-cost carriers are in a much better position Move the roads around; EasyJet is already promising free last minute changes to avoid quarantine.

“Ically historically we compare the US and China domestic markets to short-distance travel in a single European sky. “The epidemic is so memorable that the state-of-the-art market is an international market and more complex to resume,” said Jeffrey Weston of Ban & Co.

The global booking line chart for future air travel, the seven-day moving average (indicators, January 1-7, 2020 = 100) shows that the growing demand for domestic flights does not match internationally.

Business travel remains Deeply disappointed In the wake of the rise of video conferencing everywhere, some analysts predict that demand will still be ten percent below 2019 levels by 2025. Lufthansa, which draws 45 percent revenue From corporate travelers, high-offers are being turned away and the premium economy is expanding to attract value-conscious small businesses and attractive leisure travelers.

After missing the U.S. rebound, Buffett said he “still doesn’t want to buy international in the airline business[ly]” But the recession will not last forever, even in Europe. Look for strong carriers to expand biologically. Why buy a failed competitor when slots, planes and crew landings become cheaper?

Brooke.masters@ft.com

Follow the Brooke Masters with it MyFT And then Twitter





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