‘Ticket cancellations slowing, but demand recovery distant’

Top U.S. airlines and Air Canada reported slower ticket cancellations and an improvement in bookings on some routes, sending their shares higher, though executives warned that rebuilding demand to pre-pandemic levels would be tough.

Speaking at an industry conference held virtually, Delta Air Lines CFO Paul Jacobson said it could be three years before the sector sees some sense of “normalized demand” and questioned whether people would have an appetite for flying full planes before there is a COVID-19 vaccine.

Delta is restoring around 100 flights to its schedule in June, which will help slow its daily cash burn to about $40 million by the end of the month and reach cash flow break-even by the end of the year, he said.

Jacobson said he expected that any necessary headcount changes at Delta could be done through voluntary programs.

American Airlines Group CFO Derek Kerr told the conference his company would need to “right-size” to ensure operations are cash-flow positive next year, noting that all excess cash would be used to pay off debt for the next five years. American, which has invested heavily in renovating its fleet, has the highest debt load of the U.S. majors.

Air Canada CFO Mike Rousseau said he could not predict when his airline’s cash burn would go to zero, noting it will depend on revenue performance in the coming months.

Separately, Southwest Airlines said its June capacity would be roughly half its schedule a year ago. That represents an in improvement from a 60 percent to 70 percent reduction in May. It projected its daily cash burn rate will slow to the low-$20 million range in June.

United Airlines Holdings, with more international exposure, said in a statement that its June capacity would still be down by about 90 percent year-on-year, and 75 percent in July.

United said its total adjusted capital expenditure for 2021 would be close to $2 billion versus around $4.5 billion this year. (Reuters)