Nothing like Covid-19 has ever happened to the airline industry. An effective shut down of a multi-billion-dollar industry that lives on high leverage. The vast majority of airlines will visit the bankruptcy courts those who "survive" will need to follow strict principles and face difficult new challenges:
(1) Leverage was brilliant when profits are there but is terrible in a crisis
(2) Fleet flexibility is more important than cost
(3) Deal quickly and decisively with all your input costs
(4) Be ready to respond to low-cost startup (maybe)
The most important decision during the crisis was to deal with costs upfront. Many airlines assumed a "SARS" or "9/11" problem and modeled their financial response with that in mind. In other words, a local crisis that could be dealt with in a few weeks or months, and that's the model all airlines used when raising cash in the bond market in March and April. Certain airlines decided to shut down (Porter Airlines), return the "leased" equipment make a deal with their lenders and wait until the end of the storm. The speaks volume of the backers of the airline who have seen a number of usual situations in the airline business.
However, the vast majority have tried to remain in operation. Because the crisis is global certain issues are no longer important: Trying to retain slots may be a good idea but with volume down 50%, there are tons of slots available -- and can be eventually reclaimed by "new" or "old" carriers
There are a few important principles in the transport industry: frequency is a game-changer, technology, and low contact solutions have proven to be not only good during the current crisis, but financially for the airlines the savings are dramatic.
As an example many years ago banks introduced internet banking and transfer, when costing the "old" system Vs. "new" the banks realized that the cost of processing a check was nearly $2.00, the cost of processing a transfer was $0.05 -- and since then its has fallen even further since banks had never anticipated the impact with "branch visits" in their equation.
The same holds true for airlines, seat selection, printing your own boarding pass (paper or electronic), printing your own luggage tags -- this has simplified the airlines' business and even allowed the airline to sell additional services (better seats in economy, or even food). It has also reduced stress at check-in and improved relationship with check-in agents.
So let's say you are a mid-size carrier with a fleet of 40 aircraft, the vast majority are parked. What do you do? The first order of business is to determine if you have a future -- many you will slip from Chapter 11 to chapter 7 (reorganization Vs. liquidation), and that's no crime. In a sense, this unprecedented crisis forces owners and managers to really assess the future of the carrier -- if it had one!
Dealing with the workforce is hard in this business; they are generally smart and understand the implications of what can be done and achieved. There are plenty of excellent models (e.g. Air Canada) on how to deal with the crisis, but others (Aero Mexico) have gone by the way of Chapter 11 (July 2020) and have been in a state of suspended animation -- while the finances are fixed.
BTW none of this is remotely easy. The only part that is easier now is dealing with financial institutions and aircraft leasing companies -- that last thing these guys want is their aircraft back -- because airlines maintain their fleet better than lessors can, even when the aircraft are parked.
So what's the plan? Once you (owner/operator) have determined that the airline can be "saved" the measures are self-evident:
Fleet assessment (crisis and post-crisis), (1) means having a real analysis of the mix between owning, leasing short or long term or even wet leasing some aircraft; (2) staffing requirements & analysis of new systems in place that can reduce paperwork and redundant work. Think of this "restart" as an opportunity to "dump legacy systems that can be upgraded; (4) your fleet will be a consequence of your routes -- analyze those "critical", "essential", "nice to have" -- there are also routes that crews prefer because they like to live in specific locations (maybe not the hub), (5) rethink the hub and spoke model -- if you get your fleet right you may have more direct flights -- usually, they are more profitable [this is very very hard].
Once you've selected your type preference -- then the hard work begins of finding and getting the aircraft in your fleet.
Dealing with cheap aircraft that startups will use is less of a problem now than it was in the past. Aircraft that have been left in the desert for a year, older unmainteaned aircraft are almost certain to never return to commercial operation, the cost is simply too high. Think about it Trump has been trying to replace an engine on his B757 for two months now -- and so far has had a hard time locating an available low-time engine.
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