Next Victim of the Coronavirus Could be One of the World’s Great Airlines

Next Victim of the Coronavirus Could be One of the World’s Great Airlines
Next Victim of the Coronavirus Could be One of the World’s Great Airlines

As a regular customer for almost 20 years, it pains me to write this but I am concerned that one of the next big victims of the novel coronavirus (#COVID-19) could be one of the world’s great airlines. Many of the world’s largest cities have airlines that largely dominate their big airports. Think of Delta Air Lines’ presence at Atlanta’s Hartsfield-Jackson International Airport or Lufthansa in Frankfurt. Or my all-time favorite airline, Singapore Airlines in Singapore.

But as I have been digesting the news from the novel coronavirus spreading throughout Asia and seeing headlines like “Travel Stocks Hammered as Coronavirus Spreads Globally” in the Wall Street Journal today, my thoughts have been turning to the incredibly difficult situation that one of world’s great airlines dominating another city has been finding itself in.

While they have been relatively quiet about it publicly, I believe Cathay Pacific Airways is fighting for its life.

After having been victims of the months-long street protests in Hong Kong that significantly reduced the numbers of business travelers and tourists to the small city state during the second half of 2019, the dramatic downturn in travel volumes now may threaten the airlines’ very existence unless the government intervenes.

Cathay Pacific and its short-haul sister airline Cathay Dragon have been forced to ground more than half of their flights in February and March. The airline asked (basically, begged) its 27,000 employees to take to take three weeks of unpaid leave. That was three weeks ago.

Certainly, Hong Kong’s storied flag-carrier airline is not alone. The BBC reported a few days ago that airlines are projected to lose more than $30 billion due to the dramatic reductions in airline travel due to the coronavirus. Much of this ($27.8 billion) has been hitting the Asian (and especially the mainland China) carriers with European and American carriers largely spared thus far.

Just think about how devastating this has been to everyone who depends on business and leisure travelers for their livelihoods. In addition to planes, hotels and restaurants are largely empty in many cities across Asia. This is missed revenue that they can never get back.

You essentially have more than a billion people on lockdown now for more than a month. The impact of this is becoming more widespread. Singapore’s government even decided last week to provide a daily $15 cash stipend to all of the city’s 40,000 taxi and livery car drivers for the next three months.

Which brings me back to Hong Kong. Cathay Pacific for decades has been ranked as one of the world’s top airlines. Just last year it was ranked number 4 in the SkyTrax World Airline Awards (out of hundreds of airlines). I have flown with them on countless occasions, including on their busy nonstop service between New York and Hong Kong, and have never once been disappointed. They are a well run business that learned how to manage with its changing geopolitical environment. Hong Kong used to be the main gateway into mainland China. Over the past 15 years Cathay Pacific has learned to compete with the massively growing mainland carriers, like China Southern, Air China, and China Eastern. Then came the protests and unrest in Hong Kong last year that lasted much longer than expected. And now the coronavirus.

As I write this, at least 79,331 people have been infected by the novel coronavirus and 2,613 have fallen victim to the disease. I hope that one of the world’s great airlines, along with its 27,000 employees and its shareholders, is not going to be the next victim.

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