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Pandemic Risk

Infographic: Jet Fuel Recovery Stymied on Fears of a Second Coronavirus Wave

Jet fuel prices are convalescing despite an increase in scheduled flight capacity amid fears of a second wave of the coronavirus in some European countries.

Early Identification of Pandemic Risk and Mitigating Actions in the Airline Industry

The COVID-19 crisis has had an extreme and almost immediate effect on the airline industry.

Despite the industry’s vulnerability to pandemic risk, this analysis shows that airline companies have paid too little attention to this high impact risk and have struggled to publicly report on comprehensive action plans to respond to its potentially disruptive effects.

While the airline industry faces longer term disruption effects from COVID-19, many experts agree that the frequency of such disruptive events will increase in the coming years.

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Air Traffic

From Bad to Worse: Global Air Traffic to Drop 60%-70% in 2020

We have updated our global air passenger traffic forecasts and now expect traffic to fall by as much as 60%-70% in 2020 versus 2019. This is weaker than the 50%-55% drop we forecast at the end of May. We now expect 2021 air passenger traffic to decline 30%-40% compared with the 2019 base, and foresee a more gradual recovery to pre-COVID-19 levels by 2024.

S&P Sees Larger Drop in Air Traffic, says Airline Ratings to Stay Under Pressure

Global air passenger traffic will decline more than previously estimated in 2020 as the coronavirus pandemic continues to ravage travel demand, raising pressure on the credit quality of airline companies, S&P Global Ratings said in a new report.

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Stay up to date with the latest news and insight from S&P Global Market Intelligence on public health, the global economy, its sectors, and commodity markets. This newsletter will be sent every Thursday.

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Airport Credit

This Time is Different: An Anemic and Uncertain Passenger Recovery will Challenge U.S. Airports' Credit Quality

The ongoing COVID-19 pandemic and global recession continue to severely depress enplaned passenger levels at U.S. airports, which we expect will erode key credit metrics relative to historical levels for an extended period.

S&P Ratings believe the sector is venturing into uncharted territory with likely anemic system passenger growth; a smaller and weakened airline industry; and airport operators exposed to credit risk from a business model untested in the current severely stressed operating environment.

U.S. Airport Ratings Placed on CreditWatch Negative on Severe Passenger Declines and Weakening Credit Metrics

S&P Global Ratings placed 98 ratings on most U.S. airports and airport-related obligations on CreditWatch with negative implications, affecting 63 different obligors.

The CreditWatch placements are based on our view that a material change in the performance of airports and related issuers has occurred and the magnitude of the rating impact has not been fully determined.

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Data Dispatch

Top Institutional Investors Slash Airline Holdings as Industry Faces Crisis

Some of the biggest institutional investors in the U.S. airline sector slashed their holdings as the travel industry's share prices and outlook crashed amid the coronavirus pandemic, according to an analysis by S&P Global Market Intelligence.

Dumping Airline Shares Likely was Right Call for Berkshire, Despite Steep Losses

The airline shares that Berkshire Hathaway Inc. dumped at the start of the travel-quashing COVID-19 pandemic have continued their slide since Warren Buffett's sudden investment reversal, and the companies face a lengthy trip to full recovery.

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Jet Fuel

Analysis: Road Fuels Outpacing Jet as the Nature of Travel Changes

Across Europe consumers are opting for domestic holidays and destinations reachable by car this summer, widening the chasm between recovery in jet and road fuel demand.

According to traders, some consumers are afraid to fly in light of the coronavirus pandemic, and others fear a quarantine may be imposed on their return.

IEA Lowers 2020/21 Oil Demand Estimates on Stalling Mobility Recovery, Weak Aviation

The International Energy Agency on Aug. 13 lowered its estimates for world oil demand this year and next, along with its estimate of the "call" on OPEC crude oil, due to a slower-than-expected recovery for mobility and aviation.

Noting an "upsurge" in coronavirus cases and recent mobility data, the IEA said it had downgraded its road transport fuel demand estimates, particularly for gasoline, for the second half of this year, as it published its monthly oil market report.

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APAC

Australia and New Zealand Airports - Uncertain Recovery Keeps Downward Bias High

Airports’ traffic recovery to hinge on domestic policies and travel, with international traffic key for earnings quality. Sector outlook is negative.

Japan Airlines Expects 2020-21 Passenger Income to Drop by up to 65%

Japan Airlines expects its earnings from domestic and international passenger flight to drop by as much as 65% in fiscal 2020-21 (April-March) because of the coronavirus pandemic, a strong indication that a return to normal in air travel and jet fuel demand will be painfully slow.

JAL said August 3 its domestic and international passenger flight service income in 2020-21 would be about 35%-45% of the Yen 1.057 trillion ($9.97 billion) income from the segments a year earlier based on its simulated passenger demand recovery outlook.

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