No, Americans Aren’t Suddenly Flying Again, Despite What the Media Said Today to Boost Stocks of Airlines and Boeing
by Wolf Richter • Aug 10, 2020 • 53 Comments
But another $25-billion taxpayer bailout is tucked into the stimulus package. The stock market loves bailouts and hates the effects of capitalism.By Wolf Richter for WOLF STREET.The best day – meaning the least catastrophically worst day – in terms of air passengers entering to security zones at airports to board flights during the Pandemic wasn’t yesterday, as the financial media wanted to have us think, but July 2, when the count of TSA airport security screenings was down by only -63.4% from the same weekday in the same week last year, and on July 3, when the count was down by only -67.1% from a year earlier. That was over the extended Independence Day travel weekend.
Now it’s peak summer travel season. Yesterday’s TSA screenings – Sunday being a peak travel day – reached 831,789, the highest during the Pandemic. But it’s peak travel season and Sunday is one of the peak travel days, so last year on that Sunday, the TSA performed 2.65 million screenings, and this Sunday’s was down by -68.6% from Sunday a year ago. And the year-over-year decline has remained roughly in the same range since the beginning of July:
People are traveling to go on vacation. But they’re driving. All kinds of lodgings near or in national parks are booked. People want to get out and do stuff, and they have the stimulus money and the extra $600 a week in federal unemployment insurance. Early indications are that they’re driving more for vacation purposes than they did last year. That’s the big thing. But flying is still an iffy proposition for most people.
The seven-day moving average of the daily TSA screenings, which irons out the day-to-day ups and downs, has remained about the same since its best days since the beginning of July – “best” meaning least catastrophically down days. This indicates that the recovery of passenger volume has stalled since the beginning of July and is still terrible, terrible, terrible for the airlines:
Nevertheless, this situation caused the financial media to hyperventilate in an effort to pump up the shares. For example, CNBC reported breathlessly:
No capital-intensive business, such as an airline, can survive for long with roughly three-quarters of its business wiped out overnight, unless it undertakes a large-scale trimming-down, and unless it gets lots of financial help from all corners, including central banks and taxpayers. And that’s happening with airlines.
That’s the part in CNBC’s headline that nailed it: Another $25-billion bailout has been tucked into the next stimulus package.
It comes on top of the prior $25 billion in bailouts, mostly grants, that were designed to preserve airline jobs until September 30. Airlines have since told over 70,000 employees that they could lose their jobs after the deadline, and have incentivized them to leave voluntarily before the deadline, using a range of incentives, from buyout packages to early retirements.
Today, the WOLF STREET airline index of the seven largest US airlines – Alaska, American, Delta, JetBlue, Southwest, Spirit, and United – jumped 7.0%. Since word of the second $25 billion bailout package started circulating last Monday, the index has surged 15.7%. But it’s still down 44% from the end of the Good Times in mid-January 2020, and down a whole bunch more since January 2018. That 15.7% gain since last Monday is the little thing sticking up on the right of the chart (market cap data via YCharts):
And since last Monday, Boeing [ BA] has jumped 13%. Boeing is going to be kept out of bankruptcy no matter what.
That’s what it really boils down to for the airlines: Hopes for another $25 billion, mostly in gifts from taxpayers.
Americans will gradually fly more, but it will take years before passenger traffic in the US recovers to levels before the Pandemic. It took years after 9/11 and after the Financial Crisis before air passenger traffic was back to the old normal.
But this time, the damage to the industry is a lot more profound. And the lucrative business-expense-account travel segment may have permanently changed, and might not fully recover even in the years to come. Airlines have acknowledged as much and are preparing for it, and they’re trying to trim down to a size that allows them to survive in this environment – but any series of $25-billion gifts sent their way is welcome.
And the stock market loves bailouts and hates the effects of capitalism where you could actually lose some or all of your investment when something goes awry.
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53 comments for “No, Americans Aren’t Suddenly Flying Again, Despite What the Media Said Today to Boost Stocks of Airlines and Boeing”
The Bob who cried Wolf
Aug 10, 2020 at 9:39 pm
We have no desire to get on an airplane. My wife’s family lives up in the Bay Area so we’ll drive to see them but that’s it. Our motorhome has been sitting for a while and we’ve been busy getting it road worthy again. The wave of the travel future will likely be where most people can reasonably drive to from their house.
Go to any REI or RV lot and they can’t keep goods in their inventory.
We’ve camped and hiked everywhere around Southern California so are turning our attention to the obscure places we can “boon dock” in and stay away from all the new crop of campers.
On a side note, we’ve no desire to get on a cruise ship either. Most all cruises begin and end with an airline flight. Both of these sectors will survive but only through massive discounts; at least until there’s definitive proof that this virus is either not as bad or some sort of cure with definitive proof of efficacy comes into play.
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Paulo
Aug 10, 2020 at 10:06 pm
The Bob,
What I have noticed with your topic of RVs are the overnight stays in rest stops. It used to be overnighters would be rousted No longer. And rest stops in BC on secondary highways are usually on a lake or river, have toilets, and can be quite nice. No one seems to care, anymore.
A little tip we discovered on boondocking in US when we used to travel down under. If you’re getting stuck check out rural air strips. There are lots of them in the US (lots!!!) and there is always a hangar to park behind. Civil aviation folks are usually very friendly. If you get rousted just tell them you like airplanes. Plus, there’s always a sign for directions and by definition they are quiet places to park. You can always fudge and mention a ‘friend’ you think keeps his 172 around here. :-)
We’re seeing more jets in the air and assume they are Seattle/Portland for Alaska. For awhile there were none, but this last month they have increased.
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Sammy
Aug 10, 2020 at 9:41 pm
Just flew on Frontier from Trenton to West Palm beach….great flight as it was just me a two crickets. It was actually a bit creepy to be on an empty flight.
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MonkeyBusiness
Aug 10, 2020 at 9:47 pm
What’s new? The media was practically falling all over themselves praising Uber’s result.
With media like that, who needs enemies?
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MCH
Aug 10, 2020 at 9:58 pm
So, let’s assume for a second that there is no vaccine. I wonder what happens then. Would the current state of affairs persist?
Remember, there is no vaccine for MERS, no vaccine for SARS, no vaccine for HIV. The last is in spite of 25+ years of trying with billions in funding. Those are just the more notable ones, never mind stuff like Ebola or any one of dozens of other deadly viruses. Relatively speaking, C19 isn’t quite that bad. Our reaction to it has been like the plague. Thank you, media.
The only thing worse than no hope is false hope. (again, thanks media for hyping up any little bits of clinical trial on the one hand and for making C19 out like a death sentence on the other) Yes, this last bit was a bit of hyperbole…
In that case, either people adapt to the reality of C19, or we can kiss whole swaths of industries goodbye. Starting with travel.
But it’s all good, stock market needs to keep going up. Let’s go pump and dump.
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Apple
Aug 10, 2020 at 10:15 pm
I think Herman Cain set an example for everyone.
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MCH
Aug 10, 2020 at 11:57 pm
How old was poor Herman again?
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Wolf Richter
Aug 11, 2020 at 12:17 am
Too young to die.
MCH
Aug 11, 2020 at 1:25 am
What??? You want to live forever…
Ok, being a little less flippant here, I think the guy was in his 70s right? Into the danger zone I would assume for C19 related death.
One hopes that he was taking all the precautions, but let’s face it, the only way to be perfectly safe from this is to cut yourself off from all contact. Everything else carries a degree of risk. The alternative is to tell people not to go on with their lives.
There is reasonable in terms of making sure that seniors are better protected, making sure the guidelines are followed, but even then I don’t think you can avoid the fact that C19 is a fact of life.
If we get a vaccine, great, but if we don’t, would you expect the current state of affairs to continue indefinitely? That’s not really practical for a large swath of the population.
Martok
Aug 11, 2020 at 2:39 am
MCH,
Herman Cain was in good health and there is a pic of him sitting up front at the Tulsa rally, all smiles.
You say “C19 isn’t quite that bad” — after there have been 5 million cases, and 160,000 deaths, and just today 100,000 children infected after 2 weeks, of ill thought out policies of back-to-school in the US.
ALL this in 8 months because of the dereliction of duty from POTUS, and GOP sycophants.
Didn’t ever think I would ever hear a statement like this of — “C19 isn’t quite that bad”
w.c.l.
Aug 11, 2020 at 12:21 am
Was it a good or a bad one?
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Jessy S
Aug 11, 2020 at 4:12 am
It is considered bad, but when you consider his age of 74, he was right around the life expectancy in the United States. This means that he lived a good long life.
Wolf Richter
Aug 11, 2020 at 8:10 am
Jessy S,
Nonsense. You don’t understand how life expectancy works. There is life “expectancy at birth” and then for each year as you get older. For a man in the US at age 74, life expectancy is another 11.76 years.
Here are the actuarial tables were you can inform yourself and check your own life expectancy at your current age:
ssa.gov
Paulo
Aug 10, 2020 at 10:19 pm
They seem to refer to Covid 19 as SARS 2. I’m pretty sure they just discontinued the SARS vaccine quest when SARS dissipated. The efforts and knowledge gained with SARS vaccine development are now the foundation for the rapid development of what is going on with Covid. The brightest minds in the medical world are doing their best and we just have to listen to the experts and not the politicians.
I’m going to stay hopeful. Have to. We’re adapting okay in Canada, but today everyone I talked with was depressed. Everyone. I just finished up fishing after supper. Caught a salmon and lost two others. Still depressed about our changed life even though shouldn’t be. Time for a Crown Royal and some music. That should help. :-)
Wolfstreet has been a Godsend, (as my mother would say). Thanks Wolf, Nick, and MC01 for your work. Reading WS and comments has been a real plus these past few years.
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Happy1
Aug 10, 2020 at 10:58 pm
SARS and MERS killed a tiny fraction of this and didn’t attract one 100th of the money for vaccine development as this. And HIV is a completely different kind of virus, the comparison is not useful.
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viru$$
Aug 11, 2020 at 12:32 am
If money was all that was needed, we could just ask Jay ‘Brrr’ Pow to print a vaccine for us.
Spoiler: there won’t be an effective vaccine. The G and MSM will sell us on whatever WS wants RobinHooders to buy that week. Americans don’t take well to vaccines anyway, especially ones that are not even proven.
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lenert
Aug 11, 2020 at 1:32 am
Flu season is just finishing up and our state had 105 flu deaths this year and 1,504 covid deaths.
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Lance Manly
Aug 11, 2020 at 5:20 am
Contact and trace can do a lot to reduce risk and allow a return to a more normal life including air travel. Most of the developed world is doing it fairly successfully except for on large standout that appears to be incompetent….
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Happy1
Aug 11, 2020 at 8:43 am
There is a developing second wave in Europe and if you look at deaths per million, the US is better off than UK, France, Italy, Spain, and Belgium. Contact and trace is a media fantasy that applies in places with a few hundred cases a day like Japan and Australia.
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Tonymike
Aug 10, 2020 at 10:09 pm
There must be a lot of TSA “security” staff just standing around collecting checks for doing nothing? Security theater it has always been and will always be at a great cost of public dollars. I do have 30 years of security experience and every DHS Red Team that tests the system always wins. Perhaps this would be a good time to scale TSA back for the next 3 to 4 years, since there will not be anything remotely approaching pre covid flying for the foreseeable future. Give the savings to the people who need it most; the taxpayers.
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KGC
Aug 10, 2020 at 11:05 pm
You want to save the TAXPAYER money? Let companies go bankrupt! Not only does this continual bailout add to my debt load it’s causing inflation that’s going to wipe out any value my pension has. And now they’re saying that Social Security is going to have to be “re-vamped”. Good to know that the fund I paid into, for 40 years, is going to fail because we need to save Boeing. I’ll rest easier now.
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Stuart
Aug 11, 2020 at 1:06 am
Amen. No more corporate welfare. No more Socialism for the Capitalist and Capitalism for the rest of us. Marx was right.
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Petunia
Aug 11, 2020 at 5:30 am
The proposal seems to be, take a payout and put it in the stock market, where they will skim it down to zero. They will also push people out of Medicare into expensive private insurance.
The payroll tax deferral/cut is a bad deal on steroids. It will land up affecting the benefits of future retirees, especially those just a few years away from retirement. Most retirees earn the most at the end of their careers. Eliminating the tax will decrease the credit they earn for retirement.
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Phil
Aug 11, 2020 at 7:31 am
I strongly support defunding DHS and all the other alphabet Federal police forces.
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onionpatchkid
Aug 10, 2020 at 11:13 pm
Wolf, another great article. One thing that bothers me about what the media portrays is the term “taxpayer bailout”. It’s simply not true. The government doesn’t send a bill to everyone and say, “this is an additional tax you owe for your share to bailout the airlines.” The government basically keeps taxes the same and then just prints money and issues bonds to bail them out. We don’t actually get billed for it. The US government has ran a budget deficit for 46 of the last 50 years (they lost money). They’ve survived by issuing debt and printing money. The only price taxpayers really pay is the money they hold gets depreciated in value and our standard of living is dropping (2 wage families can’t even make it). The people that will end up paying for all the bailouts will be the US Government bond holders when they get defaulted on. Our debt is so large (over $25 trillion and growing) that it simply cannot be paid back by taxpayers. It’s just too large now. Bondholders have been duped by history’s greatest Ponzi scheme. Social Security is another giant Ponzi scheme. This time however, it was legal and no one is going to prison. Just don’t be the fool holding the bag when either of them implodes.
If you owned a company that had lost money in 46 out of the last 50 years and you went to a bank to get a loan, would they give you one? If I was the banker, I’d laugh at you all the way back out to the street.
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Seneca’s Cliff
Aug 11, 2020 at 12:03 am
Precision Cast Parts, the company that casts titanium jet engine parts , has announced they have laid off a total of 10,000 employees worldwide. If this goes on for too long we will lose the skills, tools and know how to build modern jet liners. This is very sophisticated technology that took decades to perfect and the best of America’s once world class engineering talent. Once it is lost we may be too far down the curve of decline to get it back. In the not distant future people will marvel at the few surviving commercial airplanes on display the same way peasants from the dark ages would marvel at the aqueducts of Ancient Rome.
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Wisdom Seeker
Aug 11, 2020 at 12:16 am
It won’t be that bad. If I look optimistically at Wolf’s chart, I see air travel up 6-fold in the past 4 months, from 5% of pre-pandemic to 30%.
Pre-pandemic air travel was excessive. 30% is too small. But it won’t stay at 30%, and there’s a happy middle ground in there.
Finally, someone’s always going to want a new jet, even if it’s a supersonic presidential-transport sort of thing.
Some of these companies will go BK, many should go BK, but some are, and will be, excellent deep-value investments for brave investors willing to consider that the world didn’t end and isn’t about to.
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RightNYer
Aug 11, 2020 at 6:43 am
Yeah, here’s the issue with that. As you said, there will be bankruptcies. But there’s essentially a huge fleet of planes, of which we will probably need half of them. That means that half of the maintenance jobs are gone, as are many of the manufacturing jobs (Boeing and Airbus will have to lay off much of their staff without permanent support). Plus, many airline leasing companies and investors in bonds like the below will take huge losses.
americanairlines.gcs-web.com
It’s never as clean as people envision it will be.
And don’t even get me started on what the ripple effects will be when the CMBS bonds start maturing and the sponsors are no longer able to refinance the balloon payment.
This country is in a lot of trouble.
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nick kelly
Aug 11, 2020 at 6:37 am
Even if commercial aviation disappeared, jet engine tech will survive via military spending, which is how it was developed in the first place and then handed down to commercial sector.
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Bet
Aug 11, 2020 at 12:28 am
I am joining the boondocking crowd. Picked up a nice Okanagan camper van. Needs a bit of interior spiffing up. Drove 520 miles to get it before the line up of others. I am sad I can’t take the Coho ferry up to Vancouver island so I will have to satisfy myself with Washington state, Idaho maybe some Montana.
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lenert
Aug 11, 2020 at 1:44 am
Stock up – Idaho and Montana are prohibition states.
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Brant Lee
Aug 11, 2020 at 7:22 am
Some of the best places I ever traveled was Interstate 90 from Washington to Montana. Could spend a retirement seeing it all taking the rural highways. LOVE northern Idaho.
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MiTurn
Aug 11, 2020 at 8:08 am
North Idaho is now bumper to bumper with RVs and tent campers. And all routes between Spokane to Glacier. Crazy!
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Just Some Random Guy
Aug 11, 2020 at 8:38 am
Which is odd given most of Glacier is closed, including the entire east side of the park, which is the best part of the park.
MiTurn
Aug 11, 2020 at 8:56 am
JSRG,
Yes, Glacier is closed, but people are still going toward that area. Maybe anywhere is better than nowhere, and the regional Walmarts are now the camping sites of choice.
Obviously I’m exaggerating (a bit), but at times it seems like my area is some sort of RV sales extravaganza. Mostly Washington plates, but from all over the west. It took me twenty minutes to get into my home town, normally never a stop. Bumper to bumper at times. I’m so looking forward to September.
Lance Manly
Aug 11, 2020 at 5:15 am
The time for bailing them out is over. It is now time for right sizing for the future.
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Dave K.
Aug 11, 2020 at 6:12 am
Flying is down for sure, but I do some work for an RV place, and boy are they busy. We handle facility maintenance and you literally have zero space in there parking lot. My guys park the truck in a neighboring lot. The GM answers the phone lines sometimes. They are moving an unbelievable amount of RV’s. Open 10 hours a day 7 days a week now.
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Johan
Aug 11, 2020 at 6:48 am
With all these RV’s on the road, you’d think the oil stocks would recover, eh? Instead it’s just endless bad news with predictions
of their demise. THEN what they gonna do with them RV’s, sell em
for scrap? Maybe I should be buying scrap metal stocks.
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RightNYer
Aug 11, 2020 at 6:31 am
Back in June, the airline stocks skyrocketed after one of the airlines jawboned and announced that it was planning for 55% of last year’s passengers in July. I knew that was nonsense, based on the TSA trends I had watched. It’s now August, we’ve seen passenger throughput at around 30%, and the same nonsensical cheerleading is used again to pump up stocks.
LOL.
The fact remains, business travel is severely depressed and properly won’t return to anywhere near where it was, and that was the most profitable for airlines. I don’t see how more than half the carriers can survive.
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sdb
Aug 11, 2020 at 6:46 am
The uptick is just folks coming back from vacation.
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wkevinw
Aug 11, 2020 at 7:31 am
Has there been any statistical study of passenger contagion from commercial flying? I haven’t seen it. I believe the air turnover in modern airliners’ passenger space is some huge number (>6volume per hour?) – the old days of recycling all the air are over. (I think).
It’s looking like flying is fairly safe.
The cruise ships had a strange outcome (or at least one of them). There was only ~ 25% infection rate if I recall, and a few % fatalities? I don’t know what mitigating actions they took- quarantine, masks, etc., after they recognized what was happening.
I am not concerned about flying commercial in the US right now. Take the well-known precautions.
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RightNYer
Aug 11, 2020 at 7:58 am
I don’t think you can draw that conclusion. We have such terrible testing and contact tracing, that no one who gets COVID after having flown has any idea whether it came from the plane, the airport, or the grocery store they went to the day before they flew.
My concern is that if you’re sitting next to someone who is positive, and he takes off his mask to drink, you’re now exposed.
Ultimately, it doesn’t matter whether flying is safe. What matters is whether people FEEL it’s safe. And most people don’t.
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VintageVNvet
Aug 11, 2020 at 8:06 am
wk,
SIL took flight NC to SoCal recently to care for ailing family elder, caught virus even with all appropriate PPE.
Had to hang out in SoCal until cleared by doc, now home and doing OK so far per brother… She is 75, but the super healthy exercise and best foods, etc., type…
And BTW, before this virus checking actuarial tables, once one reaches mid seventies, life expectancy is approx 11 years for white males, little bit less for blacks, little bit more for Hispanic and Asians, all of that in USA.
Apparently, getting to mid seventies is the challenge, especially for males,,, duh, wonder why?
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ibbots
Aug 11, 2020 at 8:19 am
Air turnover – ya, the avg 737’s cabin air is turned over every 120-180 seconds. SW is keeping the middle seat open through 10.31.
We’ve had to fly 4 times since Feb. due to family medical issues. No issues so far thank goodness. Only once did I see a flight attendant have to get on someone about their mask. Seems like the greater risk is being in the airport rather than the plane.
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Wolf Richter
Aug 11, 2020 at 8:33 am
wkevinw,
Flying is safer than going into a crowded bar. But when someone sits next to you for hours, the air circulation system of the plane doesn’t protect you. You just hope that the person isn’t infected, and there is a very good chance of that. And if the person is infected (small chance), you just hope that their face mask will protect you, and it will to some extent, but you’re too close for a regular face mask that the other is wearing to properly protect you (you need distance for that). So then you just hope that you don’t get it anyway. That risk is not big, but there is a risk.
Given that risk, as small as it may be, I’m not flying unless I have to, and I won’t fly with an airline that doesn’t block the middle seats, period.
The TSA publishes figures about how many of its agents have gotten infected, and how many died. From the TSA:
“Since the beginning of the pandemic, TSA has cumulatively had 1,581 federal employees test positive for COVID-19. 1,179 employees have recovered, and 6 have unfortunately died as a result of the virus. We have also been notified that one screening contractor has passed away due to the virus.”
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Just Some Random Guy
Aug 11, 2020 at 8:49 am
I have a guys weekend planned for late Sept. We do this every year or two and this was planned before the Corona business started. Seven of us each flying in from different parts of the country. So far nobody has cancelled. Although I suspect a few of the guys’ wives will force them to cancel, knowing them as well as I do. We shall see.
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MiTurn
Aug 11, 2020 at 8:13 am
“Boeing is going to be kept out of bankruptcy no matter what.”
This is nuts. We need to see many of these large corporate welfare cases be allowed to go through the process of bankruptcy. Bankruptcy is painful, especially for employees, but it’s a necessary step in getting a corporate house in order.
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RightNYer
Aug 11, 2020 at 9:19 am
It’s actually painful for shareholders and bondholders. Seems like it rarely affects employees.
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RON
Aug 11, 2020 at 8:17 am
Anyone know why discarded masks are not considered hazardous waste? I would think viruses and bacteria would thrive in the warm moist conditions.
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Wolf Richter
Aug 11, 2020 at 8:39 am
The virus becomes unviable fairly quickly on soft materials such as a mask. In terms of the bacteria on it, the mask is no more a hazardous waste than your discarded Kleenex.
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drg1234
Aug 11, 2020 at 9:08 am
Viruses and bacteria do not behave the same way. Bacteria thrive in warm/moist environments; viruses last much longer in cold conditions.
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Augusto
Aug 11, 2020 at 8:58 am
This is so typical of the world we now live in. The airlines and their Wall Street shills simply come up with a bullish narrative built on fantasy, BS, and a few chosen “statistics”. Voila, these stocks are going to the Moon and then Mars…don’t miss out. No one is travelling by air unless they have to, but what has truth got to do with fleecing someone of their money….well if it works. Today, the market is exploding higher. Apparently, we’ve got this COVID thing beat, more free money on the way (not that the average person will see it), buy and spend, spend and buy…This economy is running at subsistence levels, but apparently that is all we need for the snake oil sales to ply their wares…
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