|Bid||29.00 x 800|
|Ask||29.05 x 800|
|Day's range||29.73 - 31.88|
|52-week range||29.15 - 58.83|
|Beta (5Y monthly)||1.60|
|PE ratio (TTM)||7.15|
|Earnings date||22 Apr 2020|
|Forward dividend & yield||0.72 (2.29%)|
|Ex-dividend date||02 Mar 2020|
|1y target est||47.25|
(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. unloaded shares this week in Delta Air Lines Inc. and Southwest Airlines Co. as U.S. carriers braced for an unprecedented collapse in travel demand because of the coronavirus pandemic.Berkshire cut its Southwest holding by 4% and its Delta stake by 18%, according to regulatory filings Friday. That reduced the exposure of Buffett’s company to an industry in freefall, with Delta predicting a 90% drop in second-quarter sales and competitors making similarly dire forecasts.U.S. airlines, which enticed Berkshire three years ago despite Buffett’s longtime skepticism of the industry, are now turning to the government for financial aid as passengers stay home amid the viral outbreak. Drastic cuts to flight schedules reflect the virtual disappearance of U.S. airline traffic, with barely more than 150,000 passengers flying nationwide on any given weekday compared with normal loads of more than 2.2 million.“I wish I could predict this would end soon, but the reality is we simply don’t know how long it will take before the virus is contained and customers are ready to fly again,” Delta Chief Executive Officer Ed Bastian told employees. “Unfortunately, even as Delta is burning more than $60 million in cash every day, we know we still haven’t seen the bottom.”Delta fell 10% to $20.15 after the close of regular trading in New York, with Southwest and other airlines down as well. A Standard & Poor’s index of major U.S. carriers has tumbled 60% this year, paced by the 74% drop of United Airlines Holdings Inc.Federal AidAirlines are applying for federal aid as the government steps in with cash assistance for passenger carriers of $25 billion to help make payroll, plus another $25 billion in loans.United and American Airlines Group Inc. -- in which Berkshire also owns stakes -- are seeking help, as are Delta, Southwest, JetBlue Airways Corp. and Alaska Air Group Inc. The carriers submitted proposals for payroll assistance Friday. Several said they would negotiate terms in the coming days with the U.S. Treasury, which declined to comment.But as their customers stop flying, the companies said they would be forced to do more to reduce costs and seek additional capital because the government aid won’t be enough.About 30,000 of Delta’s workers have applied for unpaid, voluntary leaves and “we continue to need more volunteers,” Bastian said.Parked JetsJetBlue is parking more than 100 planes out of its fleet of 259 and cut its April flying schedule by 70%.“We’ve shared with you in the past weeks the unprecedented decline in demand for travel, and the situation continues to deteriorate,” JetBlue CEO Robin Hayes said in a message to employees.United is chopping about 80% of its capacity this month to curb costs, with even larger cuts planned in May. The weakness is likely to linger, with United planning for sales “at least 30%” lower in the fourth quarter than in the same period last year, according to a regulatory filing.The airline said it will “proactively evaluate and cancel flights on a rolling 90-day basis until it sees signs of a recovery in demand.”Berkshire has seen enough to pare its holdings. Buffett’s company still has a $1.32 billion stake in Delta and a $1.57 billion investment in Southwest. Berkshire has to report mid-quarter changes because its holdings in those airlines are above a 10% threshold.Berkshire InvestmentsBuffett’s company also has previously reported investments in American and United, but doesn’t have to disclose changes to those stakes as frequently since he’s below a 10% ownership level. Buffett’s assistant didn’t immediately respond to a message seeking comment.The billionaire was a longtime critic of the airline industry after making a bet on US Airways that he called a “mistake.” He even once joked that capitalists should have shot down the Wright brothers’ plane and saved money for investors.In late 2016, however, Berkshire revealed major investments in the big U.S. airlines. Buffett has said that some of the issues in the industry had stabilized as competition dwindled.Berkshire’s large stakes have stoked speculation that it could buy one of the airlines given that Buffett’s company had nearly $128 billion in cash at the end of the year. But the investor said in February that that would be “very unlikely” since such a deal would be complicated in the highly regulated industry.Since then, the airlines have plunged into the worst crisis in their history.“If anyone tells you that they’ve seen anything like this before,” said JetBlue’s Hayes, “don’t believe them.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. spent this week selling shares of Delta Air Lines Inc. and Southwest Airlines Co.Berkshire sold nearly 13 million shares in Delta and roughly 2.3 million shares of Southwest, according to regulatory filings Friday. That left Buffett’s company with a $1.32 billion stake in Delta and a $1.57 billion holding of Southwest stock.Airlines across the U.S. have been pummeled by a steep drop-off in travel as the coronavirus spreads throughout the country. Delta Chief Executive Officer Ed Bastian said Friday in a memo that it expects second-quarter revenue to fall 90%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Due to dried-up air-travel demand, airlines like Southwest Airlines (LUV) and Delta Air Lines (DAL) are offering cargo charter services on passenger planes.
Half of $50 billion in available aid for U.S. airlines is in the form of grants that would cover employee payroll through Sept. 30. The deadline to send applications to the U.S. Treasury department for the grants is Friday at 5:00pm ET. "We have a team focused on that as we speak," Kelly said.
Bronstein, Gewirtz & Grossman, LLC notifies investors that a class action lawsuit has been filed against Southwest Airlines Co. ("Southwest" or the Company") (NYSE: LUV) and certain of its officers, on behalf of shareholders who purchased Southwest securities between December 13, 2018 through January 15, 2020, inclusive (the "Class Period"). Such investors are encouraged to join this case by visiting the firm’s site: www.bgandg.com/luv.
(Bloomberg) -- U.S. passenger airlines would be required to maintain minimum service levels to American cities in exchange for taxpayer financial support, but could dramatically cut their flights under a plan proposed by the Transportation Department on Tuesday.Airlines would be permitted to consolidate flights to a single airport in cities with more than one under the proposal. In addition, airlines that fly to one city from multiple hubs would be allowed to fly to that city from a single hub under the plan.The document outlines how the DOT would approach the tricky task of ensuring airlines continue flying to American cities in exchange for a share of $50 billion in taxpayer aid even as they slash flights to cope with plummeting demand. The department has asked for public comments by April 2.While airlines will have significant leeway to continue operations if they choose, it appears to give wide latitude to dramatic cuts in service. Carriers wouldn’t be able to coordinate in a way that would run afoul of antitrust laws, however.In one example, the DOT said a carrier flying to a city 49 times a week -- seven times a day, seven days a week -- could fulfill its requirement with just five flights per week. That would be a 90% drop in service, which is close to the decrease in passenger traffic.Airlines flying to cities once or more daily for at least five days a week must maintain at least one daily flight, five days per week under the proposal.The DOT would allow an airline serving multiple airports in the same city, such as the three surrounding New York City, to cease operations to all but one.One of the possible outcomes could be more connecting flights. As long as an airline can connect to a point in its network through one of its hubs, it will be considered to be fulfilling the DOT proposal.The Covid-19 pandemic has led to an unprecedented decrease in people flying. On Monday, only 154,080 people went through airport security screening in the U.S., a drop of 93% compared to the equivalent day a year ago when 2.4 million flew, according to the Transportation Security Administration.American Airlines Group Inc., United Airlines Holdings Inc. and JetBlue Airways Corp. have cut their schedules on Tuesday by more than half, according to the FlightAware website. Southwest Airlines Co. will cut more than 40% of its scheduled flights starting in early May and will “evaluate further reductions” due to the drop in travel demand, the Dallas-based carrier said Tuesday. The carrier is maintaining service to every city it currently serves, Southwest said.U.S. airlines rallied on optimism for an eventual turnaround, outperforming the broader market Tuesday. United led gains among the biggest carrierswith a jump of as much as 11%.Following language of the stimulus legislation passed last week, the DOT intends to give carriers the opportunity to seek waivers to service requirements if they believe flying to a community isn’t “reasonable and practicable.”“The department recognizes that even with these reduced service levels, it may not be practicable for covered carriers to serve all points previously served in the prevailing operating environment,” the DOT said in the order.Airlines should be able to request an exemption at any time, the order proposed.Regional airlines, which had been performing about 40% of all U.S. flights, will generally be bound by the schedules of the major carriers if they accept government aid, the DOT said. The largest airlines mostly sell tickets and arrange schedules, even when flights are performed by regionals.The minimum service levels would apply to each airline individually, even if multiple carriers fly to the same city, according to DOT.The plan stems from a provision in the $2 trillion stimulus plan signed by President Donald Trump on Friday that gave Transportation Secretary Elaine Chao the authority to force airlines accepting aid to continue flying to destinations they served as of March 1.(Updates with detail from order, background from fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Zacks Analyst Blog Highlights: Delta Air, American Airlines, United Airlines, Southwest and JetBlue
Southwest Airlines Co said Tuesday it will cut more than 40% of flights from May 3 through June 5 amid a sharp decline in travel demand from the coronavirus pandemic. Southwest said it will preserve more than 80% of itineraries it previously offered but said some non-stop flights will now require a connection. Southwest is also shortening its operational day, removing many departures previously scheduled before 7 am and after 8 pm.
(Bloomberg) -- Southwest Airlines Co. is “in intensive care,” its chief executive officer said, urging employees to keep cutting expenses wherever possible as the new coronavirus continues to erode travel.The U.S. discounter is evaluating the $50 billion federal program that will provide loans and cash payments to help carriers meet payroll and other employee costs. It’s premature to know “how we might fit into this” until the Treasury Department provides details, CEO Gary Kelly said in messages to employees over the weekend and Monday.“We are in intensive care,” he said. “I don’t like being in intensive care, but we just have to admit that’s where we are.”Like the rest of the airline industry, Southwest is getting slammed by the abrupt collapse in travel demand, with airplanes in some cases flying only a handful of passengers. Cost reductions Southwest already has made would help the carrier survive about six months of such a downturn, he said.“We’ll come out of six months kind of bruised a little bit, but I don’t think we’ll be flat on our backs where we can’t get up,” he said. “If the loads continue where they are today for 12 months, that’s just impossible. There’s no way we can do that. We would run out of cash. Or we’d be in such bad shape at the end of that, that we would really be hobbled for the future.”The government’s rescue program could require equity or other securities in exchange for assistance. Additional restrictions would apply, such as limitations on reducing payrolls and restraints on executive pay. The aid “isn’t a bailout,” Kelly said.“It doesn’t eliminate our need to dramatically cut our costs,” he said. “Please don’t take your foot off the gas.”The Dallas-based airline doesn’t want to temporarily shut down to save cash, in part due to the difficulty of restarting a 750-aircraft fleet, Kelly said. It won’t join some other carriers in dedicating aircraft to hauling cargo because Kelly doesn’t believe Southwest would make money doing so.The company has cut 1,500 of its 4,000 daily flights and will reduce flying capacity 20% next month. Southwest plans to park about 50 of its older Boeing Co. 737 aircraft, in addition to 34 newer 737 Max planes that were already idled by a worldwide grounding after two fatal crashes, Kelly said.The airline has frozen hiring and pay raises, may add an early retirement option to a voluntary leave program, and has cut capital spending “to the bare minimum,” Kelly said. Southwest secured a $1 billion term loan and has tapped out an existing $1 billion unsecured revolving credit facility.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Editor's Note: Please join my colleagues and Tori Barnes from the U.S. Travel Association online at noon on April 1 for a live discussion of these issues and themes. We'll present details from multiple industry sectors as well as explain what we know as of now. You can register here. I hope to (virtually) see […]
Some U.S. airlines paint a bleak picture despite the coronavirus rescue package offering them $25 billion in grants to bear their payroll expenses over the next six months.
U.S. passenger airlines are eligible to receive $25 billion in grants under the stimulus package for meeting their payroll expenses over the next six months.
In an interview with Yahoo Finance, CBS Travel Editor Peter Greenberg questions whether the $2 trillion bailout protects airline passengers.
(Bloomberg) -- Southwest Airlines Co. is losing “big money” on every flight, raising the risk of worker furloughs in the longer-term despite billions of dollars in immediate aid from the U.S. government.The biggest U.S. discounter is “appreciative” of the package of loans and cash assistance approved by the Senate and awaiting a vote in the House of Representatives, Chief Executive Officer Gary Kelly said Thursday. If approved and signed by President Donald Trump, the program would provide an option to secure cash “that’s at least accessible, and quickly and simply,” he said.Airlines have been battered as the spread of coronavirus and related government-imposed travel restrictions have caused demand for flights to collapse. On March 25, security officials at U.S. airports screened just 239,000 passengers, down from 2.2 million a year earlier, according to trade group Airlines for America.“The load factors are at levels we’ve never seen,” Kelly said in a video message to employees, referring to the proportion of seats filled on planes. “I can assure you we are losing money on every single flight, and big money. So that can’t be sustained indefinitely.”Kelly said he’s a “firm believer” that in economic catastrophes the federal government must “flood the country with liquidity or cash to give people the means to get through this” and avoid bankruptcies across industries. Airlines are among those hardest hit by the crisis, he said.Passenger airlines are eligible for as much as $25 billion in payroll support under the pending U.S. rescue program, with another $25 billion in loans.The funds “come at a cost,” Kelly said. The government could require equity or other securities in return for cash to keep workers on the job. Other restrictions would apply, including restraints on executive pay.‘Can’t Promise’Southwest, which has never laid off workers or cut pay, doesn’t have plans for furloughs, but “I can’t promise that won’t happen,” Kelly said.“We have opportunities to raise capital in the private markets, and now we also have that opportunity with the federal government,” Kelly said, “We are going to work hard to make a commitment not to furlough people anyway, but the government grant program could prove to be something that gives us a lot more confidence that we can follow through with that.”Southwest earlier said it would shave capacity at least 20%, freeze hiring and offer leave to workers to reduce operating costs. The Dallas-based carrier secured a $1 billion term loan and drew down the full amount of an existing $1 billion unsecured revolving credit facility earlier this month.(Trade group corrects passenger data in third paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
U.S. airlines prepare to navigate a turbulent future even with billions in aid from U.S. taxpayers.
The U.S. Senate's rescue package includes a $58 billion financial aid in the form of grants and loans, for the struggling U.S. airline industry.
(Bloomberg Opinion) -- Faced with an industry heading toward a wave of bankruptcies, an investor’s first instinct is often turning to the first three pages of the financial statements.How much cash does the business have on hand, and what inventories and due payments can be used to meet short-term debts? What assets does it have, and how productive are they in generating earnings?Singapore Airlines Ltd.’s announcement Friday of a shock-and-awe sale of new shares and convertible bonds worth up to S$15 billion ($10.5 billion) suggests that the clues about who will survive the virus-induced crisis sweeping the airline industry are further back.Don’t look to the balance sheet and statements of income and cashflows: The answer, as we’ve argued, is buried in the list of major shareholders that most companies include toward the end of their annual reports.There isn’t an airline on the planet that would be able to hunker down and survive the worst-case scenario for the Covid-19 pandemic — an 18-month-plus shutdown of much of the global aviation industry.Take one rough-and-ready measure, the cash ratio, which is the ability to pay for liabilities over the next 12 months out of cash and easily sold securities. Of the 29 largest carriers by revenue, not a single airline can boast a cash ratio higher than one, meaning they’d all run short of money before satisfying their creditors.If less reliable short-term assets such as receivables and inventories are deployed, things improve a little, bringing Ryanair Holdings Plc, Japan Airlines Co., ANA Holdings Inc. and Eva Airways Corp. above one.Alternatively, if you can cut general operating expenses and aircraft lease liabilities by, say, 60% and assume that all prepaid tickets are refunded with no drain on net assets, you can add Air Canada, IAG SA, JetBlue Airways Corp., Alaska Air Group Inc., and Southwest Airlines Co. to that group. On that sort of adjusted cash ratio, all of those carriers would have enough funds to see them through the year — but the rest of the global airline industry would go to the wall.That’s why having a rich patron is more important than ever. In the case of Singapore Air, the key player is state-owned investment fund Temasek Holdings Pte., which already owns 55% of the stock and may end up with far more if other investors don’t take up their entitlements under Friday’s cash call.Aviation has been a cornerstone of Singapore’s national development policy since the 1970s, both through Singapore Air and another Temasek investment, Changi Airport. Economic downturns — with Singapore’s growth contracting 10.6% in the first quarter — are no time for governments to shirk their commitment to long-term expansion, and SIA has been at the core of that vision.The S$5.3 billion equity issue will be the largest rights offering the global airline industry has ever seen, and implies drastic dilution for existing shareholders who don’t subscribe — especially once the S$9.7 billion bond tranche converts to equity 10 years from now. That prospect pushed the shares down more than 10% before recovering to a 3.5% drop midday.Still, the amount is so gobsmacking that it should put to rest any questions about Singapore Air's ability to weather this crisis. The S$15 billion total would be sufficient to cover two years’ worth of short-term liabilities at current levels, and is roughly equivalent to its entire market capitalization before the announcement.What does this mean for other airlines? The ones most at risk are those that neither have the relatively ample liquidity of the Japanese, North American and western European carriers mentioned above, nor the benefit of a friendly government shareholder or wealthy parent to bail them out.As Anurag Kotoky of Bloomberg News has shown by looking at another measure of bankruptcy risk, the truly vulnerable carriers make up a surprisingly short list with surprisingly few major names.Among the less-liquid carriers with a free float of more than 50%, Air France-KLM, Turk Hava Yollari AO, and SAS AB still retain government shareholdings that might be called upon to help out in a crisis; Qantas Airways Ltd. and Deutsche Lufthansa AG have a history of state ownership which may serve the same purpose; and Korean Air Lines Co. and Asiana Airlines Inc. have historically been indulged within South Korea’s chaebol system of conglomerates.The three most prominent players left — major U.S. carriers Delta Air Lines Inc., American Airlines Group Inc. and United Airlines Holdings Inc. — saw their shares surge this week after Congress moved through a bailout bill providing around $25 billion of support. Still, that amount would only cover about six months of liabilities, and their competitors would likely want a piece of the action too.Three low-cost carriers — EasyJet Plc, Norwegian Air Shuttle ASA and SpiceJet Ltd. — may also find themselves in a spot, dependent on the ability and willingness of their entrepreneurial founders to dig into their pockets if things get tight.There will be plenty of bankruptcies in aviation over the coming year, but this industry has always lived close to the edge. Most of the biggest players have gotten where they are by working their connections to governments and wealthy patrons to backstop their commercial ambitions. If one thing survives the crisis of coronavirus, it will be the strength of nation states.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
With the U.S. government on the cusp of providing airlines with a bailout, travelers might wonder how flying may change, since the Treasury Department soon may take equity stakes in carriers in exchange for government assistance due to coronavirus. But travelers may be disappointed. Yes, the government could own pieces of airlines, and airlines will […]
A new poll shows Americans have a pessimistic view of the airline industry in lieu of the COVID-19 pandemic
In California, children cannot go to school, visit the playground, or play with friends. No one can eat in restaurants, or hike on many of the state's most beautiful trails. Most people are being told to stay home. Yet airports continue to operate. Their employees have been been deemed essential, exempted from the state’s stay […]