As the COVID-19 pandemic continues to spread around the world, the most affected industry is the aviation industry. Under the double impact of global economic pressure and travel restrictions, the aviation industry has fallen into an unprecedented crisis.
As the world's largest aerospace industry company, Boeing not only closed most of its factories, but also plummeted by more than 70%. Even Buffett also bought the wrong aviation stocks due to buying at the bottom of , causing heavy losses.
Boeing 's stock price plummeted 70% "Stock God" suffered heavy losses
In the past two months, as the crown jewel of the world's high-end manufacturing industry, Boeing has reached a dangerous moment, with its stock price plummeting 70%, and its market value is less than one-third of Moutai's . Some netizens joked: "A glass of wine by the Chishui River, three Boeing cannot be replaced."
As the world's largest spacecraft manufacturer, Boeing company and European Airbus divide the global civil aviation aircraft market. Boeing employs 100,000 people, and 70% of the annual income will be transferred to more than 17,000 suppliers. indirectly feeds tens of millions of people . Under the COVID-19 pandemic, the aviation industry in various countries is in bleakness. Party A has no money in his pocket and Party B is not having a good time. Airlines have cancelled orders one after another.
US Boeing CEO David Calhoun: We are now providing liquidity at a critical moment to provide good protection for our aviation industry and related practitioners, so that we can keep up with the pace when the recovery comes.
Currently, Boeing is seeking US$60 billion in government bailouts, and also announced that it will suspend dividends to shareholders until further notice.
At this critical and sensitive moment, Buffett, the stock god who is best at entering the market at the end of the business, announced that he would buy airline stocks at the bottom when the US stock market fell sharply on February 27, and bought 976,000 shares of Delta Air Lines at $46 per share.
Warren Buffett : I won't sell airline stocks, it's awful right now, but I always feel that the pandemic will appear at some point, but it won't stop the world from progressing.
The blessing of the "Stock God" failed to prevent airline stocks from falling all the way. However, after buying, the stock price was cut in half in just one month. Buffett reduced his holdings of 13 million shares at $22 per share on April 2, and the loss at the bottom was about $23 million. At the same time, Buffett also reduced his holdings of about 2.3 million shares of , Southwest Airlines , which also suffered heavy losses. From buying to reducing holdings, the "Stock God" chose to cut his losses in just 33 days. From the predicament of Boeing to Buffett's failure, it reflects the heavy blows suffered by the global aviation industry in the epidemic. In the face of the COVID-19 pandemic, all airlines are unable to survive.
Under the epidemic, the global aviation industry encountered an "emergency landing"
Boeing 's situation is just a microcosm of the global aviation industry. As the COVID-19 epidemic spreads around the world, the ban on airlines issued by countries has forced the global aviation industry to fall into a dilemma. Airline layoffs and airports are closed. Faced with this unprecedented "grounding wave", some people use this metaphor to describe it: the plane parked on the apron and basked in the sun, and you can hear the sound of money melting.
Virgin Australian Airlines Flight Crew: Finally I must say that this is very likely our last flight, and for the foreseeable future, it is certainly the last one. As flight attendants, we have always called the sky our home, and it was a little surreal to us when we returned to Earth for the last time.
This is a farewell speech given to passengers by a Virgin Australia flight attendant who arrived at Dunedin Airport in New Zealand. The airline is preparing to suspend all international flights between March 30 and June 14, while cutting 90% of domestic flight capacity and leaving 80% of its employees on leave.
Virgin Australia is not an isolated case. Delta Air Lines , which has been ranked as the world's most profitable airline for many years, has now had to tighten its belt - all executives have cut their salary by 50%, and nearly 15% of the 90,000 employees have been suspended from pay.The salary of Qantas executives has been adjusted from a 30% cut to an unpaid rate until the end of the fiscal year. British Airways announced that it will lay off employees. The Center for Asia Pacific Aviation (CAPA) warns that most airlines around the world may go bankrupt by by the end of May.
Chairman of the International Air Transport Association Alexander De Juniac: The data on industry losses caused by the new crown epidemic may currently reach as high as US$312 billion, an increase of about 25% from the previous estimate.
In addition to the flight attendants, there are also airports that have been shut down. Statistics show that as of now, a total of 14 airports around the world have stopped operating, 7 airports have closed some terminals, and 9 airports have closed towers. This has resulted in large numbers of commercial facilities in some airports or shortened business hours.
Airport closure also brings new problems - finding downtime. According to statistics from survey agencies, there are currently more than 6,600 aircraft worldwide, and this number is still growing. These planes that cannot take off will be paid for a considerable downtime fee for every day of stay. "The plane parked on the apron and basked in the sun, and you can hear the sound of money melting." The metaphor of vividly describes the losses of the plane parking to the airline.
Multiple governments extend a helping hand. The aviation industry is "ready to fly"
△ CCTV Finance "Economic Information Broadcast" column video
The crisis is coming, and the losses are aggravated. Global airlines have to seek various ways to maintain their operations cash flow , overcome this difficulty, and wait for the moment of taking off again.
For airlines with high debt, cash flow is the first priority. According to statistics, the average debt-to-equity ratio of the US aviation industry in exceeds 100% , of which, United Airlines is 177%, Delta Airlines 117%, and Southwest Airlines 40.7%.
Chairman of the International Air Transport Association Alexander De Juniac: Our cash can last for about two months or less, and then we have no money, so we urgently need to inject $200 billion in cash into the aviation industry.
Under the crisis, airlines cut salaries and lay off employees while surviving; while taking a different approach, saving money and increasing revenue. Korean Air began to use passenger aircraft to carry cargo on March 13, reducing aircraft parking costs while meeting cargo needs. Cathay Pacific will sell 6 Boeing aircraft and related equipment, with a total transaction cost of US$703.8 million to supplement operating funds.
General Manager of China Eastern Airlines Group Co., Ltd. : We did a charter flight to resume work and production as soon as possible, and so far, nearly 200 flights have been completed.
However, as an industry with high investment and low cash flow, airlines have limited self-rescue capabilities.
In the face of the increasingly tense epidemic situation, seeking assistance from governments has become a life-saving straw for airlines to survive. British Virgin Atlantic Airlines seeks 7.5 billion pounds of financial aid from the British government; the Australian government announced that it will reduce taxes and fees of about 715 million for domestic airlines.
US President Trump : We will do our best to support the aviation industry. It is not their fault, not anyone's fault. We will be very helpful to them and we have told the aviation industry that we will help them.
The US government's $25 billion bailout agreement for the aviation industry is close to completion. Swedish and the Danish government took action to transfusion blood for Nordic Airlines, providing SEK 3 billion, or about US$300 million, to ensure that it can get loans from commercial banks. Russia provides 23 billion rubles, or approximately US$300 million in fiscal support to its aviation industry. As early as February, China exempted the civil aviation development fund that airlines should pay, and provided financial support for international regular passenger flights and major transportation flight missions, reduced fees and burdens, and increased infrastructure investment.
Secretary-General of China Air Transport Association Liu Shuguo: There are differences in operating conditions among airlines. The government’s support policies may not ensure that all airlines survive. There may be corporate bankruptcy and mergers and acquisitions. We recommend that relevant national departments continue to study and introduce more systematic and comprehensive support policies. The full recovery of the air transport industry also depends on the fundamental control of the epidemic at home and abroad. Especially due to the spread of the epidemic abroad, it will take some time for international passenger transport to recover.
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