Updated September 10, 2021Emerging From the Pandemic
“To suggest that the airlines should have better prepared for this environment seems akin to suggesting Pompeii should have invested more heavily in firefighting technology.” (JPMorgan, Mar. 22, 2020)
2
» After deep losses in 2020, U.S. passenger airlines recorded $4.3B in pre-tax losses in the first half of 2021, which would have been far worse without federal payroll support.
» The sizable associated interest expense will limit their wherewithal to rehire and reinvest.
» After several months of steady increases, new ticket sales have subsided in large part due to a resurgence of COVID-19 cases and hospitalizations.
» Demand for corporate and long-haul international air travel continues to lag, so revenues remain well below 2019 levels and industry cash burn continues.
» While revenue lags, the recovery will remain vulnerable to shocks and cost headwinds.
» Air cargo demand reached an all-time high in 2020 and continues to grow in 2021.
Key Points
3
The 11 Largest U.S. Passenger Airlines Incurred $4.3 Billion in Pre-Tax Losses in 1H 2021Results Boosted Materially by Federal Payroll Support Program (PSP)
1. Sale of frequent flyer award miles to airline business partners, transportation of pets, in-sourced aircraft and engine repair, flight simulator rentals, inflight sales, etc.2. Related primarily to ownership of aircraft, ground support equipment, information technology, etc.3. Aircraft rents, professional fees, food/beverage, insurance, commissions, GDS fees, communications, advertising, utilities, office supplies, crew hotels, payments to regional carriers, etc.
Source: Alaska, Allegiant, American, Delta, Frontier, Hawaiian, JetBlue, Southwest, Spirit, Sun Country and United
Financial Results (in $ Billions) Jan-Jun 2021 % vs. 2019 % of CategoryPassenger (RPMs down 47%, yield down 15%) 37.4 (55) 81.5Cargo 2.6 58 5.6Other1 5.9 (1) 12.9
Total operating revenues 45.8 (50) 100.0Salaries, wages and benefits* 21.6 (17) 45.3Aircraft fuel and related taxes 10.5 (43) 21.9Maintenance materials and repairs 3.1 (28) 6.5Landing fees and airport rentals 5.1 7 10.6Depreciation and amortization2 4.6 (8) 9.7Other3 2.9 (78) 6.1Total operating expenses 47.8 (41) 100.0
Interest and other non-op expenses, net 2.3 116 n/aPre-tax income/(loss) (4.3) (151) n/a
* Includes the benefit of ~$13.5B in federal PSP funds, which extend through Sept. 30, 2021
4
In 2020, Travel-Sector Profitability Took a Massive Hit; Overall Corporate Profitability Was FlatPre-Tax Profit Margin (% of Operating Revenues)
Source: Company SEC filings
6.3 9.8 13
.8
13.8
14.5
21.5
27.8
28.6
34.6
4.9
(58.
8)
(7.1
)
3.6 14
.5
25.4
(34.
3)
32.0
32.9
Chipotle Airlines Disney Starbucks All USA Apple Hotels McDonald´s Railroads
2019 2020
Note: Airlines = Alaska/Allegiant/American/Delta/Hawaiian/JetBlue/Southwest/Spirit/United; Hotels = Choice/Hilton/Hyatt/Marriott/Wyndham; Railroads = CSX/Norfolk Southern/Union Pacific
5
The Timing of a Return to 2019 Passenger Volumes Depends in Large Part on Business TravelAnother Open Question Is the Degree to Which Leisure and VFR Traffic Remain Robust in 2022-2023
(70)
(60)
(50)
(40)
(30)
(20)
(10)
0
10
20
2019A 2020A 2021F 2022F 2023F 2024F
Pessimistic OptimisticSource: A4A and various airline equity analysts
U.S. Airline Passenger Traffic Change (%) vs. 2019
2019 Passenger Volumes
Best Case
Worst Case
Note: A = actual; F= forecast
6
A Multiyear, Multistage Recovery Is Underway
Traffic Recovery
Revenue Recovery
Financial Recovery
Reduce Cash Burn
Restore Profitability& Rebuild Margins
Repair Balance Sheets
Contain the Virus
Stabilize the Economy
Increase Efficiency
Aviation-Government Collaboration on Health/Facilitation/Safety/Technology
Business Model Adaptation + Cost-Reduction Initiatives + Debt ReductionCost-Reduction Initiatives + Business Model Adaptation + Debt Reduction
This study is the first comprehensive research looking at the entire inflight experience.
The multiple layers of protection against COVID-19 make being on an airplane as safe as if not substantially safer than other routine activities, such as grocery shopping or going to a restaurant.
The research found that there is a very low risk of virus transmission on airplanes.
The scientists concluded that the ventilation on airplanes is so good that it effectively counters the proximity travelers are subject to during flights.
The Harvard research team surveyed 25 airports of various sizes, performed its own modeling of air quality in airport settings and applied the findings to a comprehensive assessment of research.
The report concludes that airports have been proactive in implementing multiple layers of measures to mitigate the risk of COVID-19 transmission, including face covering requirements, physical distancing, enhanced disinfection processes, enhanced ventilation and deployment of touchless technologies.
Researchers from the Harvard confirmed that this multi-layered approach “significantly mitigates risks” in airport settings.
9
J.D. Power: North America Airline Customer Satisfaction Climbs to Record HighLatest Results Released May 2021
Source: J.D. Power North America Airline Satisfaction StudySM
Note: The 2021 study is based on responses from 2,309 passengers who flew on a major North American airline between August 2020 and March 2021.
692
687
668
658
673
683
681
695
712
717
726
756
762
773
792
819
0
200
400
600
800
1,000
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
“The airline industry adapted to a most unusual year by simplifying ticketing processes, waiving change fees and baggage fees which were key to persuading people to fly during the pandemic. Airline personnel rose to meet the challenges of a drastically altered travel environment. Maintaining that level of flexibility and recognition of individual passenger needs will be a strategic advantage for airlines that want to set themselves apart in passenger satisfaction as travel volumes start to recover.” (Michael Taylor, J.D. Power, May 12, 2021)
Aircraft Baggage Boarding Check-in Cost and fees Flight crew ReservationIn-flight services
10
U.S. COVID-19 Fatality Rates Are Steadily Approaching Mexico’sNew Confirmed COVID-19 Deaths (7-Day Moving Average) per Million People
Source: Johns Hopkins University Center for Systems Science and Engineering via Our World in Data (a project at the University of Oxford)
0
1
2
3
4
5
6
7
8
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22-J
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23-S
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30-S
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USA Brazil Mexico Canada UK Japan
4.649
2.176
5.104
0.544
1.931
0.491
USA Brazil Mexico Canada UK Japan
Sept. 3-9
11
In Several Nations, at Least 70% of the Population Has Received at Least One Dose of a VaccineAruba/Belgium/Canada/France/Germany/Ireland/Israel/Italy/Netherlands/Spain/UK: 60%+ Fully Vaxed
5329
69 6544 50
62
5
63 63
30
74
1532 30 33
63
12
67 61 7053
38
7254
10
18
6 7
1112
4
11
9 10
31
5
12
3418 21
6
28
86
5
624
2
4
63
47
75 72
5562 66
16
72 7361
79
27
66
48 5469
40
7567
75
59 6274
58
0102030405060708090
100
Fully Partially
Source: Our World in Data (a project at the University of Oxford using governmental sources) via The New York Times and DOT Data Bank 1B * Partially = received at least one dose of a vaccine as of Sept. 10, 2021
% of Entire Population Vaccinated* in Selected U.S.-International O&D MarketsSorted left to right by U.S.-carrier O&D passenger volume in 2019
12
The EU Has Overtaken the United States With Respect to Percentage of Population VaccinatedQatar/Canada/UK/EU Exceed the USA; Japan Rapidly Closing In
0
10
20
30
40
50
60
70
80
90
1-Ja
n
16-J
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31-J
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15-F
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2-M
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17-M
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29-A
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13-S
ep
28-S
ep
QatarCanadaUKEUUSAArgentinaJapanMexico
% of Entire Population Receiving at Least One Dose of a COVID-19 Vaccine
Source: Our World in Data (a project at the University of Oxford using governmental sources)
13
The Global Economy Is Projected to Grow 6% in 2021Wells Fargo Forecasts
6.0 5.9
5.4 7.0
2.3 5.4
4.2 8.2 8.2
6.4 5.2
WorldUSA
EurozoneUK
JapanCanada
AustraliaChinaIndia
MexicoBrazil
Source: Wells Fargo Securities (Sept. 9, 2021)
“The most important development in the U.S. economy since our most recent forecast was published on August 12 has been the continued spread of the Delta variant... As a result, Americans have generally become more cautious. The University of Michigan index of consumer sentiment, which was released after our August forecast, plunged to its lowest level since 2011, and the Conference Board’s index of consumer confidence also weakened considerably in August.” (Wells Fargo, Sept. 9, 2021)
Projected 2021 Real GDP Growth (%)
$18.7$19.1
$18.4
$19.5
$20.4
2018 2019 2020 2021F 2022F
U.S. Real GDP (Trillions, $ 2012)
14
In Most Recent Week, U.S. Airline Passenger Volumes Were 18% Below Pre-Pandemic LevelsDomestic Air Travel Down 14%, International Air Travel Down 40%
(100)
(80)
(60)
(40)
(20)
0
20
40
7-Ja
n-20
28-J
an-2
0
18-F
eb-2
0
10-M
ar-2
0
31-M
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0
21-A
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0
12-M
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0
2-Ju
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23-J
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21-D
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1
Domestic USA Canada Mexico Atlantic Latin (excl. Mexico) Pacific
7-Day Rolling Change (%) vs. Pre-Pandemic in Onboard Passengers*
* Onboard (“segment”) passengers; “pre-pandemic” precedes March 1, 2020Source: A4A member passenger airlines and branded code share partners
15
In Most Recent Week, U.S. Passenger Airline Departures Were 15% Below Pre-Pandemic LevelsDomestic Flights Operated Down 14%, International Flights Operated Down 30%
Source: A4A member passenger airlines and branded code share partners
(100)(90)(80)(70)(60)(50)(40)(30)(20)(10)
010203040
7-Ja
n-20
28-J
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0
18-F
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0
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31-M
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21-D
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1
Domestic USA Canada Mexico Atlantic Latin (excl. Mexico) Pacific
7-Day Rolling Change (%) vs. Pre-Pandemic* in Aircraft Departures
* “Pre-pandemic” precedes March 1, 2020
16
Domestic Load Factor Has Fallen Below Pre-Pandemic Levels
79.7
74.0
0102030405060708090
100
3-Ja
n10
-Jan
17-J
an24
-Jan
31-J
an7-
Feb
14-F
eb21
-Feb
28-F
eb7-
Mar
14-M
ar21
-Mar
28-M
ar4-
Apr
11-A
pr18
-Apr
25-A
pr2-
May
9-M
ay16
-May
23-M
ay30
-May
6-Ju
n13
-Jun
20-J
un27
-Jun
4-Ju
l11
-Jul
18-J
ul25
-Jul
1-Au
g8-
Aug
15-A
ug22
-Aug
29-A
ug5-
Sep
12-S
ep19
-Sep
26-S
ep3-
Oct
10-O
ct17
-Oct
24-O
ct31
-Oct
7-N
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-Nov
21-N
ov28
-Nov
5-D
ec12
-Dec
19-D
ec26
-Dec
2019 2020 2021
Weekly Average Domestic U.S. Load Factor* (%)
Source: A4A member passenger airlines and branded code share partners * Revenue passenger miles divided by available seat miles
17
Average Onboard Volumes Have Picked Up on Transoceanic Flights
Source: A4A member passenger airlines and branded code share partners * Onboard (“segment”) passengers
7-Day Moving Average Onboard Passengers* per Flight
0255075
100125150175200225250
7-Ja
n-19
4-Fe
b-19
4-M
ar-1
91-
Apr-1
929
-Apr
-19
27-M
ay-1
924
-Jun
-19
22-J
ul-1
919
-Aug
-19
16-S
ep-1
914
-Oct
-19
11-N
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99-
Dec
-19
6-Ja
n-20
3-Fe
b-20
2-M
ar-2
030
-Mar
-20
27-A
pr-2
025
-May
-20
22-J
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020
-Jul
-20
17-A
ug-2
014
-Sep
-20
12-O
ct-2
09-
Nov
-20
7-D
ec-2
04-
Jan-
211-
Feb-
211-
Mar
-21
29-M
ar-2
126
-Apr
-21
24-M
ay-2
121
-Jun
-21
19-J
ul-2
116
-Aug
-21
13-S
ep-2
111
-Oct
-21
8-N
ov-2
16-
Dec
-21
Domestic USA Canada Mexico Atlantic Latin (excl. Mexico) Pacific
18
U.S. Airline Revenues Are Improving But Remain Below 2019 LevelsRevenues Are Expected to Return to Pre-Pandemic Levels in the Second Half of 2022
Sources: Alaska/American/Delta/Hawaiian/JetBlue/Southwest/United as reported to A4A on a consolidated company basis
A4A Member Airline Operating Revenues: Change (%) vs. 2019
6 5
(54)
(92) (88)(81) (79) (77)
(68) (69) (66) (64) (66) (67)(56) (52)
(45)
(29) (24)
(100)
(80)
(60)
(40)
(20)
0
20
Jan-
2020 Fe
b
Mar Ap
r
May Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan-
2021 Fe
b
Mar Ap
r
May Jun
July
Aug
Sep
Oct
Nov
Dec
19
In Most Recent Week, TSA Checkpoint Volumes Fell 19% Below 2019 Levels
Source: Transportation Security Administration
0250500750
1,0001,2501,5001,7502,0002,2502,5002,750
1-Ja
n8-
Jan
15-J
an22
-Jan
29-J
an5-
Feb
12-F
eb19
-Feb
26-F
eb5-
Mar
12-M
ar19
-Mar
26-M
ar2-
Apr
9-Ap
r16
-Apr
23-A
pr30
-Apr
7-M
ay14
-May
21-M
ay28
-May
4-Ju
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Jul
16-J
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-Jul
30-J
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Aug
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-Aug
27-A
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Sep
10-S
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-Sep
24-S
ep1-
Oct
8-O
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-Oct
22-O
ct29
-Oct
5-N
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-Nov
19-N
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-Nov
3-D
ec10
-Dec
17-D
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-Dec
31-D
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2019 2020 2021* U.S. and foreign carrier customers (excluding Known Crewmember® personnel) traversing TSA checkpoints
TSA Traveler Throughput* (7-Day Moving Average, in Thousands)
20
In August, Demand Was Notably Strong in Montana, Wyoming and the CaribbeanChange (%) in TSA Traveler Throughput by U.S. State/Territory — August 2021 vs. August 2019
Source: Transportation Security Administration
21
For October, U.S. Airports Are Showing a 16% Decline in Flights vs. Pre-Pandemic LevelsFive States Are Exceeding 2019 Levels; District of Columbia and New York Seeing Largest Cuts
Source: Diio by Cirium published schedules (Sept. 3, 2021) for all U.S. and non-U.S. airlines providing scheduled service to all U.S. and non-U.S. destinations
6 5 4 4 2
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Change (%) in U.S. Outbound Scheduled Passenger Flights: Oct-2021 vs. Oct-2019
22
Only Three U.S. Airlines Are Deploying More Capacity in October 2021 Than in 2019Allegiant and Spirit Growing the Fastest; United/Delta/Hawaiian Down the Most
Source: Diio by Cirium published schedules (Sept. 3, 2021)
25.3 14.2
1.0
(2.1) (3.6)(15.0) (15.8)
(21.3) (23.0) (24.2)
Change (%) in Systemwide Scheduled Available Seat Miles: Oct-2021 vs. Oct-2019
23
In July 2021, Domestic Air Travel to Hawaii Reached an All-Time HighInternational Air Arrivals Remain Far Below Pre-Pandemic Levels
Source: Hawaii Department of Business, Economic Development & Tourism * Daily passenger counts include returning residents, intended residents and visitors but exclude interisland and Canada passengers
Average Daily Air Passenger Arrivals to Hawaii*20
,629
21
,005
24
,449
22
,307
24
,113
27
,999
28
,484
25
,090
20
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10,000
15,000
20,000
25,000
30,000
35,000
40,000Ja
n-19
Mar
-19
May
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Jul-1
9
Sep-
19
Nov
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Jan-
20
Mar
-20
May
-20
Jul-2
0
Sep-
20
Nov
-20
Jan-
21
Mar
-21
May
-21
Jul-2
1
Sep-
21
Nov
-21
Jan-
22
Mar
-22
May
-22
Jul-2
2
Sep-
22
Nov
-22
Domestic Japan Other International
On 3/26/2020, Hawai’i mandated a 14-day self-quarantine for out-of-state arrivals. Beginning 10/15/2020, passengers with negative test results for COVID-19 could avoid quarantining. Effective 7/8/2021, the State dropped testing and quarantine rules for fully vaccinated domestic travelers and all restrictions on inter-island travel.
July 2021 Domestic = All-Time High
24
In August 2021, U.S.-International Air Travel* Fell 54% Below 2019 LevelsNon-U.S. Citizen Arrivals Trailed U.S. Citizen Departures by ~20 Percentage Points
(63.6)
(43.4)
(54.3)
(100)
(80)
(60)
(40)
(20)
0
20
Jan-
20
Feb-
20
Mar
-20
Apr-2
0
May
-20
Jun-
20
Jul-2
0
Aug-
20
Sep-
20
Oct
-20
Nov
-20
Dec
-20
Jan-
21
Feb-
21
Mar
-21
Apr-2
1
May
-21
Jun-
21
Jul-2
1
Aug-
21
Sep-
21
Oct
-21
Nov
-21
Dec
-21
Non-U.S. Citizen Arrivals U.S. Citizen Departures Total
Change (%) vs. 2019 in Total* U.S.-International Air Passengers
Source: U.S. Department of Commerce National Travel and Tourism Office using DHS I-92 / APIS data * Gateway-to-gateway passengers on U.S. and foreign scheduled and charter airlines and general aviation
25
Of the 20 Largest U.S. Country Pairs in August 2019, Five Fell More Than 80% in August 2021U.S.-Mexico/Dominican Republic Saw Volumes Rise
Top-20 U.S. Country Pairs: Change (%) in Passengers* in August 2021 vs. August 2019Sorted left to right by highest volume in August 2019
(81)
9
(86)
(62)
(91)
(68)
(98)
17
(79)
(61)(73) (71) (77)
(26)
(77)
(6)
(59)
(40)(28)
(89)(80)
* Gateway-to-gateway passengers on U.S. and foreign scheduled and charter airlines and general aviationSource: DHS I-92 / APIS data compiled by U.S. Department of Commerce National Travel and Tourism Office
26
In August, Mexico Was the Clear Leader for U.S.-International Air TravelTop U.S. Country Pairs Propelled by Beach Seekers and Those Visiting Friends/Relatives (VFR)
August 2021: Top-30 U.S. Country Pairs by Total Nonstop Air Passengers* (000)
2,86
9
843
590
450
363
336
316
308
264
263
244
237
226
225
223
170
164
158
156
144
138
130
130
120
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117
107
106
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dor
Gre
ece
Japa
n
Hon
dura
s
Irela
nd
Turk
s &
Cai
cos
U.S. Citizens Others
Source: DHS I-92 / APIS data compiled by U.S. Department of Commerce National Travel and Tourism Office * Gateway-to-gateway passengers on U.S. and foreign scheduled and charter airlines and general aviation
27
In August, Top Three Foreign Gateways to/from USA Were All in Mexico
August 2021: Top-30 Foreign Gateways to/from USA by Total Nonstop Air Passengers* (000)
946
652
354
318
311
308
306
295
295
288
263
262
259
244
237
226
214
180
176
168
158
144
144
138
130
130
129
128
120
117
CU
N
MEX
GD
L
FRA
SDQ
SJD
LHR
CD
G
YYZ
PUJ
MBJ
DO
H
AMS
SAL
PTY
IST
STI
BOG
NAS
PVR
AUA
ICN
SJO
TLV
LIM
DXB KE
F
MAD
GU
A
ATH
U.S. Citizens Others
* Gateway-to-gateway passengers on U.S. and foreign scheduled and charter airlines and general aviationSource: DHS I-92 / APIS data compiled by U.S. Department of Commerce National Travel and Tourism Office
28
Since Mid-July, Growth of Overall and Corporate Ticket Sales Has Reversed Course
Source: Airlines Reporting Corporation (ARC)
(40.7)
(62.3)
(100)
(80)
(60)
(40)
(20)
0
20
12-J
an-2
0
9-Fe
b-20
8-M
ar-2
0
5-Ap
r-20
3-M
ay-2
0
31-M
ay-2
0
28-J
un-2
0
26-J
ul-2
0
23-A
ug-2
0
20-S
ep-2
0
18-O
ct-2
0
15-N
ov-2
0
13-D
ec-2
0
10-J
an-2
1
7-Fe
b-21
7-M
ar-2
1
4-Ap
r-21
2-M
ay-2
1
30-M
ay-2
1
27-J
un-2
1
25-J
ul-2
1
22-A
ug-2
1
19-S
ep-2
1
17-O
ct-2
1
14-N
ov-2
1
12-D
ec-2
1
All Segments Corporate Segment
* Results do not include sales of tickets purchased directly from airlines and are not net of refunds or exchanges.
Change (%) vs. 2019 in Weekly Tickets Sold* by U.S. Travel Agencies
29
Government Data Shows Average Airfares Remain Lower Than Pre-Pandemic Levels
Source: Bureau of Labor Statistics (CPI series CUSR0000SETG01) and DOT Data Bank 1B (all carriers/cabins/fare basis codes)
$381
$404 $411 $413 $418 $414
$383$363
$349 $347
$322
$314
$340$356 $364
$373 $370
$345$336 $330 $333
$316
$234
$200
$250
$300
$350
$400
$450
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
Real ($2021) FareNominal Fare
Average 1Q Domestic Round-Trip AirfareFirst quarter of each year
279.
192
304.
773
302.
202
311.
074
311.
679
294.
099
280.
880
273.
574
262.
372
265.
641
202.
801
241.
251
0
50
100
150
200
250
300
350
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
U.S. CPI for Airline Fares (Index: 1982-84 = 100)U.S. city average for July of each year, seasonally adjusted
Down 9% from 2019 and 23% from 2014 Down 32% from 2019 and 44% from 2014
2019
Inde
x: 1
982-
84 =
100
30
In Most Recent Week, Average Airfares on Tickets Sold Were 30% Below Pre-Pandemic LevelsFares Remain Depressed Due Primarily to Dearth of Business and Long-Haul International Travel
(30)(41)
(90)(80)(70)(60)(50)(40)(30)(20)(10)
0
7-Ju
n-20
21-J
un-2
05-
Jul-2
019
-Jul
-20
2-Au
g-20
16-A
ug-2
030
-Aug
-20
13-S
ep-2
027
-Sep
-20
11-O
ct-2
025
-Oct
-20
8-N
ov-2
022
-Nov
-20
6-D
ec-2
020
-Dec
-20
10-J
an-2
124
-Jan
-21
7-Fe
b-21
21-F
eb-2
17-
Mar
-21
21-M
ar-2
14-
Apr-2
118
-Apr
-21
2-M
ay-2
116
-May
-21
30-M
ay-2
113
-Jun
-21
27-J
un-2
111
-Jul
-21
25-J
ul-2
18-
Aug-
2122
-Aug
-21
5-Se
p-21
19-S
ep-2
13-
Oct
-21
17-O
ct-2
131
-Oct
-21
14-N
ov-2
128
-Nov
-21
12-D
ec-2
126
-Dec
-21
Passengers Ticketed Average Fare
* Net tickets and fares (gross sales minus refunds) sold in the United States for future travel to/from U.S. airports
Change (%) vs. 2019 in Weekly Ticket Sales*
Source: A4A analysis of data from Airlines Reporting Corporation (ARC)
Since July 4, net ticket sales* have taken a turn for the worse.
31
The U.S. Travel Association Projects U.S. Business Travel to Return to 2019 Levels in 2024
Source: U.S. Travel Association and Tourism Economics (June 15, 2021)
270
88 116 193 235 271 280
36
7.3 9.1
24 30
35 36 $306
$95$125
$217$265
$306 $316
2019
2020
2021
F
2022
F
2023
F
2024
F
2025
Domestic International
U.S. Business Travel Spending* (Billions)
“Lingering COVID restrictions and a patchwork approach to reopening across the country will prevent the economically crucial business travel segment from recovering until at least 2024… Travel overall is by far the U.S. industry hardest hit by the ongoing fallout of the COVID-19 pandemic.” (U.S. Travel Association, June 2021)
* Includes air and non-air travel
464
181 210
352428
471 474
2019
2020
2021
F
2022
F
2023
F
2024
F
2025
U.S. Domestic Business Trips* (Millions)
32
Airlines Have Coped in Part by Taking on Billions in DebtNet Interest Expense Doubled From 2019 to 2020 and Will Approach $11 Billion in 2021-2022
108
105
163 171
160
155
2018 2019 2020 2021F 2022F 2023F
Year-End Total Debt ($ Billions)
2.0 1.9
3.8
5.6 5.34.8
2018 2019 2020 2021F 2022F 2023F
Interest Expense, Net ($ Billions)
“For 2021 and beyond, we anticipate a major deleveraging cycle as the industry will have no choice but to address its significant debt load.” (Deutsche Bank, “Airline Industry Update,” July 1, 2020)
+$58
B
Source: A4A, equity analysts and filings of Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit and United
33
In 2020, S&P Lowered Its Credit Ratings on Eleven U.S. and Canadian Airlines*Ratings Actions Taken to Reflect Weakened Financial Condition and Heightened Risk
Source: Standard & Poor’s
Alaska Allegiant American Delta Hawaiian JetBlue Southwest Spirit United Air Canada WestJet
15-Mar-20 24-Aug-20 15-Apr-21
BBB+BBBBBB-BB+BBBB-B+BB-CCC+CCCCCC-CCCD
* Publicly traded U.S. carriers in S&P Global coverage universe
A-
34
Ridership on U.S. Intercity Rail Remains Far Below Pre-Pandemic LevelsMay 2021 Ridership Fell 61% Below May 2019
Sources: Bureau of Transportation Statistics
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019 2020 2021
Monthly Ridership (000s) on U.S. Intercity Passenger Rail*
* Passengers transported on Amtrak and Alaska Railroad operations
35
For U.S. Airlines, Growth in Air Cargo Continues to Outpace Air Travel by a Large Margin
Sources: Bureau of Transportation Statistics T1 for all U.S. airlines providing scheduled and nonscheduled services
19.3
(37.6)
(100)(80)(60)(40)(20)
02040
Jan-
20
Mar
-20
May
-20
Jul-2
0
Sep-
20
Nov
-20
Jan-
21
Mar
-21
May
-21
Jul-2
1
Sep-
21
Nov
-21
Jan-
22
Cargo Traffic (RTMs) Passenger Traffic (RPMs)
Change (%) vs. 2019 in Traffic* – U.S. Passenger and Cargo Airlines
* RTMs = freight, mail and express revenue ton miles; RPMs = revenue passenger miles
36
The Pandemic Has Taken a Material Toll on U.S. Airline EmploymentVoluntary Reductions, Retirements, Job Changes, Employer Shutdowns and Other Factors at Play
Source: Bureau of Transportation Statistics based on payroll near the 15th of the month
Carrier Universe Scheduled U.S. Passenger Airlines
All U.S. Passengerand Cargo Airlines
Measure FTEs* (000) Headcount (000)
All-Time High Jun-2001: 545.9 May-2001: 760.8
Post-2000 Low Point Apr-2010: 376.7 Apr-2010: 562.3
Pre-COVID Peak Feb-2020: 458.2 Feb-2020: 753.4
Latest Available Data Point Jun-2021: 394.3 Jul-2021: 715.3
* Full-time equivalents (FTE) = full-time workers plus 0.5 * part-time workers
37
As of June 2021, U.S. Passenger Airline Employment Was 64K FTEs Below Pre-COVID LevelsMore Jobs Were Lost From Feb-Nov 2020 Than Were Added Over the Preceding 10 Years
Source: Bureau of Transportation Statistics for scheduled U.S. passenger airlines (i.e., all that report scheduled passenger revenue)
Jun-2001, 545.9
Apr-2010376.7
Feb-2020458.2
Nov-2020363.4
Jun-2021394.3
325350375400425450475500525550
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
U.S. Scheduled Passenger Airline Full-Time Equivalent Employees (000s)
All-Time High
Lowest Since 1Q87
Pre-COVID Peak
Down ~169K (31%)
Up ~82K (22%)
Lowest Since 2Q86
38
U.S. Passenger Airlines Have Grown the Active Fleet by 649 Units Since the End of 2020Net Reduction of 1,109 (19%) From YE19 to YE20 and 460 (8%) From YE19 to 8/31/2021
Number of Active Aircraft*
1,810 1,517 1,610
3,475 2,847 3,328
495
307 382
5,780
4,671 5,320
12/31/2019 12/31/2020 8/31/2021
Regional Single-Aisle Twin-Aisle
Source: Anuvu (formerly Global Eagle masFlight) * Operated by or on behalf of Alaska/Allegiant/American/Delta/Frontier/Hawaiian/JetBlue/Southwest/Spirit/Sun Country/United in any of the previous seven days
-1,109 +649
39
After 9/11 and the Global Financial Crisis, It Took Years for Air-Travel Demand to RecoverPassenger Volumes Took More Than Seven Years to Recover From the Financial Crisis/Oil Spike
Source: A4A Passenger Airline Cost Index, BTS (Form 41 Schedule T1) and Bernstein Research
Four-Quarter Rolling Passenger Volume (Millions) and Operating Revenues (Billions)
$0
$50
$100
$150
$200
$250
0100200300400500600700800900
1,000
4Q00
4Q01
4Q02
4Q03
4Q04
4Q05
4Q06
4Q07
4Q08
4Q09
4Q10
4Q11
4Q12
4Q13
4Q14
4Q15
4Q16
4Q17
4Q18
4Q19
4Q20
4Q21
4Q22
4Q23
4Q24
4Q25
4Q26
4Q27
4Q28
4Q29
4Q30
Passengers Enplaned (Mils) Operating Revenues ($ Bils)
* Passengers enplaned systemwide on U.S. airlines in scheduled and nonscheduled services
9/11 Terrorist Attacks
Global Financial Crisis+
$100/bbl Crude Oil
40
Air-Cargo Demand Reached an All-Time High in 2020 and Continued to Grow in 1Q 2021Air Cargo Had Taken 10 Years to Recover From the Global Financial Crisis and Subsequent Oil Spike
Source: Bureau of Transportation Statistics (Form 41 Schedule T1)
Four-Quarter Rolling Air Cargo Revenue Ton Miles* (Billions)
48.8
0
10
20
30
40
50
60
4Q00
4Q01
4Q02
4Q03
4Q04
4Q05
4Q06
4Q07
4Q08
4Q09
4Q10
4Q11
4Q12
4Q13
4Q14
4Q15
4Q16
4Q17
4Q18
4Q19
4Q20
4Q21
4Q22
4Q23
4Q24
4Q25
4Q26
4Q27
4Q28
4Q29
4Q30
* Cargo revenue ton miles (RTMs) flown on U.S. passenger and cargo-only airlines in scheduled and nonscheduled services
9/11 Terrorist Attacks
Global Financial Crisis+
$100/bbl Crude Oil
41
Pandemic-Driven Technology Acceptance, Digital Competence and Enhanced Cleaning Protocols Will Endure, and Airlines and Airports Will Continue to Invest Accordingly
Source: McKinsey & Company interview with Massachusetts Port Authority CEO Lisa Wieland (Nov. 20, 2020)
“COVID-19 has brought about an acceleration of digital competency across demographic cohorts. We have a lot of different people who fly through the airport. We are constantly thinking about the experience we present to them. And if people have become more technology savvy, more digitally competent, that means we can accelerate and roll out the contactless passenger journey across many platforms—and there will be an acceptance of and a desire for them.”
“Airports and airplanes are cleaner than they’ve ever been and will continue to be that way because it’s important for restoring confidence in air travel. We expect the new hygiene and enhanced-cleaning protocols we’ve implemented to continue. Passengers can expect that from airports and airlines going forward.”
42