Industry analyst for Cowen, Helane Becker, has today released her latest ‘Ahead of the Curve’ report for aviation. In it, she makes some startling predictions for the future of the industry, including that it will take up to six years to fully recover, and that US airlines will retire as many as 1,000 planes by the end of this year.
Airlines will be 30% smaller
Helane Becker, a Director at US financial analytics firm Cowen and an airline specialist, has today unveiled a stark prediction for the future of aviation in the US. Her forecast for what lies on the other side of the global pandemic, as reported by Seeking Alpha, paints a bleak picture of the industry of tomorrow.
Most pointedly, Becker believes that US airlines will retire between 800 and 1,000 aircraft this year, leading to a much smaller aviation industry than was previously seen. She predicts huge job losses in the sector too, signaling that many of the furloughs that we’re seeing now may well evolve into permanent layoffs. She told Seeking Alpha,
“We believe airlines will be 30% smaller at the end of his year than they were at the start of the year. Also, we expect there will be between 100K and 200K fewer employees at the end of the year than there were at the beginning of the year.”
We’ve seen a number of airlines around the world eyeing early retirement of aircraft as a consequence of the global travel downturn. A380s and 747s, in particular, have headed off to aircraft graveyards early, while smaller but older planes have also been earmarked for the chop.
In the US, American Airlines, in particular, has been somewhat vocal about its plans to retire planes early. It is phasing out its 767s by the end of May, and will look to retire as many as 100 aircraft early by the close of the year. Becker previously told Reuters that many of the planes which have gone into storage may now never make it back into active service, saying,
“While many of these will be temporary storage, many of these aircraft will never resume service. We believe the airline industry will look very different when we get to the other side of this.”
If Becker’s prediction is right, we could see many more aircraft from the fleets in the US disappearing by the end of 2020. According to Statista, the number of aircraft in the US commercial fleet as of the start of April was 7,550.
Four to six years for international demand to recover
As well as her take on the shape of the US fleet in the future, Becker has made one of the most damning predictions to date for the return of air travel demand. She told Seeking Alpha,
“Demand is 5% of what it was in February, and we continue to believe it will take 3 to 5 years for domestic demand to return to 2019 levels and 4 to 6 years for international demand to get back to those levels.”
Cowen #airlines analyst Helane Becker released a new #AheadOfTheCurve report. Believes major airlines can operate for ~12 months at bare-bones operations w/ gov't grants. Will take 2-5 years to return to 2019 levels. Expects reduced fleet count, and potential for ~100K job losses
— cowenresearch (@CowenResearch) April 13, 2020
Earlier this week, the CEO of Austrian Airlines forecast that it would be 2023 before international demand recovered. While Austrian operates in a very different market to the US airlines, it’s not a million miles away from what the Cowen analyst has said today.
LATAM Brazil’s president, Jerome Cadier, said just yesterday that he didn’t see the air travel industry making a recovery in anything faster than two to three years, a notion that was echoed by Aerospace Wales’ CEO John Whalley to the BBC earlier this month. Whalley, who oversees a number of factories producing parts for Airbus planes, said,
“There will be a recovery but it may be a couple of years to get back to where we were a couple of weeks ago.”
Whichever viewpoint is on the money, the overarching message is clear for all to see. While we may see an uptick in aviation activities before the end of the year, it’s going to be a long, long time before we see the type of demand that was typical of pre-coronavirus, if it ever comes back at all.
What do you think about aviation’s recovery? Guaranteed over time, or never to be seen again? Let us know in the comments.