TSA checkpoint traffic is remaining stable around 650k, with the daily average only increasing by 15,493 passengers (from 649k to 664k). It has been one month since traffic peaked at 764k. Since then, the daily average of traffic hasn’t changed significantly from week to week. The flattening of the TSA checkpoint curve coincides with the sharp increase of COVID-19 cases over the past month.
FAA traffic numbers have come in for the month of June. The month of June saw a steady increase in flights to and from Atlanta. May reported had a high of 673 daily flights, while June nearly reached 40% of pre-corona numbers at 955 daily flights. June of last year averaged 2,609 daily flights. Expect to see a decline for the month of July, if TSA checkpoint numbers are anything to go by. The ratio will not be 1-to-1 however, as airlines will likely change their schedules to match the needs of their customers.
DAL averaged $25.41 last week, down 3.5% from last week’s average $26.32.
Delta has stepped up its cleanliness standards, now sanitizing not only their airplanes, but also their lobbies and kiosks. They now also require masks to be worn on all flights, barring doctor approved health reasons.
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The biggest controversy surrounding airlines for a while has been their penchant for repurchasing stock to boost stock value. According to a Bloomberg article, American Airlines bought back over $12.5 billion of stock despite having negative cumulative free cash flow.
However, the average daily cash burn rate in Q2 was $55 million, the highest among its peer group. Delta Air Lines (NYSE:DAL) has brought down its cash burn to $27 million in June; United Airlines (NASDAQ:UAL) is burning $25 million per day as per its latest quarterly reports.
Airline traffic is not returning to normal anytime soon. In the meantime, AAL has to contend with an additional $2 billion in interest costs and high cash burn. Non-existent revenues and negative FCF are already sizeable headaches. Increasing interest costs just exacerbate bankruptcy risks.
The Atlanta-based airline says it now plans to add 700 flights to its worldwide schedule in August, growing to a total of 3,000 daily departures. That includes both domestic and international flights.
Previously, Delta planned to add 1,000 flights to its schedule in August, then as the virus spread, the company said it may instead add half that many. The airline said it “continues fine-tuning its schedule following recent surges in COVID-19 cases that have slowed customer demand.”