Insights

September 2020 Market Recap

Airlines sunk after recovering slightly on the news that coronavirus cases are ticking back up – especially in Europe. New travel restrictions will hamper the travel recovery. The price of gold was especially volatile in the month of September – falling back below $1,900 an ounce.

Click the buttons below to read our recap of the airline sector and gold market for September 2020.

Strengths

  • Airlines are touting coronavirus tests to lure travelers. Hawaiian Airlines is offering customers drive-through COVID testing in California to help Hawaii-bound travelers avoid a 14-day quarantine rule. United is offering on-the-spot testing to customers flying to Hawaii for $250 to avoid the two-week quarantine. Airports are also offering rapid tests to bring back travel. The Rome airport introduced rapid screening on September 16, reports Bloomberg.
  • Airbus is preparing to deliver its first American-made A220 jetliner to Delta later this month, doubling down on its Alabama site with a new assembly line building this model after making more than 180 A320s, reports Bloomberg. Despite a long-running dispute with the World Trade Organization, Airbus’ U.S. facility has expanded its global reach.
  • JetBlue Airways President Joanna Geraghty, citing Harvard’s School of Public Health data, says that wearing a mask and HEPA air filtration systems yield a “less than 1 percent risk of transmitting COVID in an aircraft.” This positive data could help spur an increase in air travel if passengers are confident that they have a low chance of contracting the virus from another passenger.

Weaknesses

  • The airline industry continues to cut jobs around the world. British Airways says it could cut as many as 10,000 jobs. Lufthansa said it plans to cut its fleet by 100 jets and shed 22,000 full-time positions. Singapore Airlines will eliminate 20 percent of its workforce – about 4,300 jobs.
  • Coronavirus cases are spiking back up – especially in Europe. U.S. carrier stocks, in addition to global carriers, fell after rising early in the month on the news that new lockdown measures are in place. Some fear this is the “second wave” of cases moving through Europe and could expand to the U.S. A grim milestone was reached in the pandemic – 1 million deaths from the virus globally.

  • Tourism is also suffering from the lack of air travel. U.K. hotel operator Whitbread said it plans to eliminate nearly one in five jobs, or about 6,000 workers. The U.K. announced bars will start closing and companies should again have people work from home if possible. Daily COVID cases rose above 4,000 – a number not seen since May.

Opportunities

  • Airlines continue to get creative on new sources of income. Thai Airways is opening up its Airbus and Boeing flight simulators to the public, reports Bloomberg. Starting in October, customers can get into a mock cockpit for 30-minutes for around $380. The carrier also transformed its cafeteria into an airplane-themed restaurant complete with plane seats and furniture made from spare jet parts. Australia’s Qantas Airways is selling fully stocked bar carts from its retired Boeing 747 fleet for $1,000 – complete with mini wine bottles. Singapore Airlines has turned its A380 superjumbo jet into a pop-up restaurant.
  • American Airlines announced it will begin updated computer-based training for pilots on the grounded Boeing 737 Max in late October. Bloomberg reports the carrier expects all pilots to be re-trained by January and is laying out plans for the Max’s returns “in the near future.” This is a big win for Boeing that a major carrier is showing confidence in the troubled jet’s return to the skies.
  • United Airlines boosted its flight schedule in October. The major domestic carrier will fly 40 percent of its schedule from the same month last year, up from 34 percent of its year-earlier schedule in September.

Threats

  • Tens of thousands of U.S. airline workers are set to lose their jobs on October 1. The government aid package in March gave carriers support for payroll in return for not cutting jobs until the end of September. However, it seems unlikely that another relief package will pass before then, forcing carriers to make massive staff reductions due to the continued decimation in air travel with a recovery not seen in the near future.
  • The impending Brexit could threaten British pilots. A no-deal exit of Britain from the European Union at year-end could deprive British pilots of the right to fly EU-registered planes. Bloomberg notes that The Department of Transport is hoping for a bilateral agreement on aviation safety that would include mutual recognition of pilot licenses.
  • According to Air New Zealand’s CEO, quarantine-free travel between Australia and New Zealand is unlikely to resume for at least another six months. Plans for a safe-travel corridor to stimulate tourism was put on hold after renewed coronavirus outbreaks in both countries, reports Bloomberg.

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