That's a warning alright
There's an old joke in financial markets: If god wanted man to fly, he would have made airlines profitable.
A few months ago, airlines looked to be one of the best bets out there. Profits were finally climbing, people were flying more than ever and the industry was largely immune from technological disruption.
Now half the industry needs a bailout.
The IATA chief seeks airline bond buybacks by states to aid refinancing. He also said European airlines are most at risk.
There is some bailout rage building but airlines are an essential industry and no one is going to let the major carriers go down. In a year or two, demand for flying should be right back to what it was a few months ago. It's the structure of the bailouts that's going to be important. Some will be nationalized, some will get giveaways. I don't think loans will work in most cases because the industry always operates on thin margins.
I would be great if some of them could hedge fuel 3 years out but I don't think anyone has the liquidity to do that but it would be a wonderful way to structure a bailout for airlines and oil companies.
