Airlines focused on short-haul routes with people visiting family and going on holiday will do best from any recovery in air travel, according to Barclays.
Second-quarter numbers from the sector are due shortly and will not be pretty, said analysts at the bank’s investment arm.
“With revenues across our coverage down 91% on average, we believe the focus for the quarter to be reported will be on cash burn vs. guidance, reflecting each airline’s ability to reduce fixed cost bases and defer capex payments.”
Barclays predicts the sector’s cash burn will be the highest to-date, exacerbated by fuel hedging costs and cash refunds of tickets.
How any recovery is progressing will also be keenly watched, said the bank.
Some airlines have talked about pent-up demand, it said, while UK expenditure on air travel paints an encouraging early demand picture.
Spending is now down 40% year-on-year compared to 78% in April.
“IAG (LON:IAG) , easyJet PLC (LON:EZJ) and AF-KLM look less well-positioned, with 80%, 69% and 63% of short-haul seat capacity directly competing with LCCs (low cost carriers) and ULCCs, respectively.
Cash burn generally should improve from here as costs are kept under control and furlough schemes continue to be supportive for likely another few quarters.
Ticket refunds of c€1bn for some listed airlines will further weigh on cash reserves, but all airlines have now secured their short-term liquidity needs, Barclays reckons.