Highlights

Analysis and forecast on global airlines restoration from China's route performance:

>Airlines that mainly operate domestic routes have better recovery than those relying on international routes.      The later will suffer serious setbacks and a longer recovery period.

>LCC may experience faster recovery.

>Cash is particularly important in times of crisis. With the global outbreak of COVID-19, many countries have introduced strict travel restrictions, and the global aviation industry is once again facing a market shrinkage and a sharp drop in demand. During this time, airlines with large cash reserves and low debt ratios are able to withstand the negative pressure of short-term cash flow and have better financing capabilities.

Performance of Different Route Networks in China (as of April 12)

The stable epidemic prevention and control in Mainland China and restoration of multiple routes sinceWuhan lock down ended on April 8 have driven continued recovery of the domestic civil aviation market. On the other hand, due to the rapid COVID-19 outbreak overseas and more strict restrictions on international flights, it still shows a downward trend in international routes and take more time for recovery.

Restoration of Airlines in Mainland China

VariFlight CARDI reveals better performance of China Airlines and Spring Airlines:

China Express mainly benefits from a high proportion of uniquely enjoyed routes, capacity purchase model and policies on work and production resumption.

Spring Airlines had less suspensions for its low-cost operations at the peak of the epidemic. As the epidemic is effectively controlled, the high proportion of mainland routes and the decline in oil prices have further accelerated the recovery of Spring Airlines.

In addition, the financial report shows that Spring Airlines has sufficient cash reserves. Based on the assessment of its cash outflow from operating and investment activities in 2019, it can better cope with the crisis.

Completion of Airlines in the US (as of April 12)

Based on VariFlight CARDI, WN enjoys the similar trend in year on year flight completion with Spring Airlines.

As a representative low-cost airline, WN has benefited from its low-cost model, a relatively high proportion of domestic routes and the stable financial arrangement. Compared with the other three major airlines in the United States, WN is less affected by the epidemic. The demands to US aviation market were once sharply reduced due to the 911 incident, which caused serious cash flow problems for various airlines. Because ofthe relatively sufficient cash reserves and low debt ratios, WN thereby maintained a strong response capacity and finally used the contraction of other airlines to expand its market during the 911 crisis.

Airlines of Transit Hubs (as of April 12)

We made CARDI analysis of Emirates, Singapore Airlines and Cathay Pacific, which exclusively rely on international networks. All of these carriers has been dramatically cut back due to the disrupts international traffic flows.

This article is excerpted from COVID-19 Outbreak: Analysis of Global Aviation Operation(Updated April 13, 2020) by VariFlight.