Airlines

HKIA passengers down 90% in March 2020

HKIA

We plotted the state of travel going through HK International Airport. We added average passengers per flight which shows that even though actual flights are 82.1% down in March 2020 over March 2019, the number of passengers per flight has halved too meaning total passenger numbers have fallen 90%. So HKIA was averaging 19,200 passengers a day in March 2020 vs 214,000 in March 2019.

To think how much airlines used to book in cash advances on ticketing. That revenue is long gone putting further cash strains on the airlines.

On the flip side, cargo jet movements reached a peak number of 5,775 in March 2020 although average cargo tonnage is down by 20%.

MSM relishes trade of economic depression via pandemic over Trump as POTUS w/ no virus

Trump Derangement Syndrome (TDS) knows no bounds. Yes, the mainstream media (MSM) is celebrating the milestone that the Dow is below the level when Donald Trump was inaugurated.

We have always said that if Trump continued to boast about market gains he would have to wear it on the downside too. Alas, he is being hoisted by his own petard.

Sadly, as much as CNN and others relish the though of Trump out of office, we sincerely doubt the vast majority of Americans would trade a pandemic with catastrophic unemployment over business as usual before the WuFlu with a Trump at the helm.

Markets are forward looking. They anticipate where corporate earnings are likely to be. This market rout has little to do with Trump’s policies in isolation.

We’ve said repeatedly that global central banks have created a debt bomb through reckless monetary policies over the last two decades. They have proved just how little impact cutting rates to zero or throwing $850bn in handouts has on markets. They’re out of ammunition. Confidence is shot. We’re in uncharted territory.

Boeing is the perfect canary in the coal mine. The 737MAX debacle which is imminently due to be on sale again to a market that has effectively vanished. Airlines are cutting routes and it will be up to the zombie lending cycles of aircraft leasing companies to renegotiate rates so they can keep the patient alive. Airlines will push out deliveries.

However before Boeing’s core business troubles, the management embarked on short term incentive chasing buybacks to the tune of $43bn since 2013. The company is trading negative equity and has drawn down ALL of its credit lines ($13.8bn) and now wants a handout.

All of this is the product of two decades of mindless expediency. Governments are just as culpable for allowing greed to override common sense. No lessons have been learnt since 2000 and especially 2008. Blue chips like Boeing and GE are now heading to record lows because of it. Ford Motor is rated junk. How long before Boeing and GE fall foul of the same problem?

We are particularly interested in the next set of results from Parker Hannifin. It is like the global industrial hardware store. All of the major manufacturers use Parker for parts – pumps, hydraulics, pneumatics, valves, hoses etc. When we see Parker’s upcoming report on order flows we can gauge how bad it is at the manufacturing coal face.

This time we are staring at a “global depression” and it would be nice to think the MSM would try to put some context around the ramifications of this virus and the raft of economy killing policies governments around the world are introducing instead of just blaming Trump. Yes, he’s been his normal self during this but is he responsible for the actions of other countries going into shutdowns? Seriously? Do the US Coronavirus stats stack up poorly vs countries like Italy on a relative or absolute basis? No. Moreover COVID-19 cases in the US are a mere fraction of H1N1 swine flu cases which the media made nowhere near the level of hysteria as now. It’s a disgrace how far the media will go for clickbait.

Had the world’s central banks behaved sensibly to stop excessive debt and allowed markets to function freely, this pandemic would have had far less effect than it is now because we would have had the ammunition to fight this war of attrition. Now all our governments and regulators are doing is moving phantom armies across maps trying to stop economic Armageddon.

Let shareholders burn

We buy shares because we expect to gain a return. We all know there are risks attached. As we wrote yesterday on Boeing, it has embarked on reckless buybacks which have compromised the balance sheet. The company has drawn down all of its $13.8bn in credit lines from banks overnight. It is panic stations. It was completely avoidable.

How ironic that companies which are among those that splurged $4.5 trillion on share buybacks just to chase short term management incentives will be the first lining up for taxpayer support to save them from negligent governance.

We say shareholders should suffer the downside of that investment choice. They had the power to remove officers from the companies they entrusted management to. If a company goes belly up, let other players in the market pick up the spoils for fire sale prices.

The Wolf Street correctly noted,

The Trump administration is putting together a rumored $850-billion stimulus package that will include taxpayer funded bailouts of Corporate America, according to leaks cited widely by the media. Trump in the press conference today singled out $50 billion in bailout funds for US airlines alone. A bailout of this type is designed to bail out shareholders and unsecured creditors. That’s all it is. The alternative would be a US chapter 11 bankruptcy procedure which would allow the company to operate, while it is being handed to the creditors, with shareholders getting wiped out.”

All this Trump package will do is encourage the same bad behaviour. We think this is nothing more than trebling down on the problems that hit us in 2008. But hey, it’s an election year!! Reckless.

As usual, the SEC has been asleep at the wheel. Same as in the lead up to 2008. This is what happens when regulators hire clueless lawyers who don’t have a clue about how markets operate. Therefore they miss crucial events.

As for shareholders – you earned it.

The only upside to this market volatility is that no one has talked about climate change for weeks! Probably because when people are about to lose their livelihoods, all of a sudden virtue signaling is worthless. That goes for diversity and inclusion too. Every cloud has a silver lining.

Coronavirus will end up killing way more jobs than the people in them

GDANSK, POLAND - SEPTEMBER 3, 2018: Norwegian Air Shuttle airlines offers cheap flights. Airplane Boeing 737-800 takes off on from the International Lech Walesa Airport in Gdansk.; Shutterstock ID 1176630295; Purchase Order: -

None of this should be a surprise. 7,300 (out of 11,000) workers at Norwegian Air have been temporarily laid off as 85% of flights are cancelled.

This follows on from Scandinavian Airline Systems (SAS) which has temporarily suspended 10,000 workers and cut 90% of flights to combat coronavirus.

In short, Coronavirus will likely kill way more jobs than the people in them. Sadly, there isn’t a robust economic cycle to be able to weather this storm.

Note that Boeing shares fell 20% overnight as markets finally come to grips with what we mentioned yesterday. Boeing was also put on credit watch negative by Fitch. GE is back at $6.

And Trump’s S&P500 index reading was 2,264 when he took office. It is at 2,474 or 9.3% above that. We always said what he proudly attributed to his leadership on the way up could end up making him hoisted by his own petard on the way down.

Buy Gold, not toilet paper.

Flotsam and Jet Some

This is the downside of virtue signaling. 16yo pigtailed activist Greta Thunberg’s misguided altruism will unfortunately lead to more carbon emissions than had she flown by commercial jet. Her solar powered sailing boat might have made her feel warm and fuzzy inside but there is a catch that probably hasn’t been mentioned.

According to a spokeswoman for Team Malizia, “We added the trip to New York City at very short notice, and as a result two people need to fly over to the U.S. in order to bring the boat back…The world has not yet found a way to make it possible to cross an ocean without a carbon footprint.

Presumably two of the other crew members will fly home. So that’s the equivalent of two return flights where Thunberg would have only costed only one.

The irony. In order to save the planet, she has inadvertently bumped the very footprint she tried to avoid (although technically the scheduled flights were going anyway). To think she missed out on gourmet airline meals served on plastic trays and reruns of David Attenborough’s Climate Change:The Facts on a loop. Even better she wouldn’t need to poop in a bucket.

What a joke.

No Greta, Trump doesn’t have time for you

Image result for thunberg trump

As 16yo Swedish climate activist Greta Thunberg sets sail for America she claimed she doesn’t want to waste her time talking to President Trump. CM is pretty sure that Trump wouldn’t waste his time making time in his calendar to see the teenager. There is absolutely no way in the world that the lefty activists that guide her would pass up an opportunity to pillory Trump in person as she challenged him on the need to panic. The mainstream media would be gushing in its derangement on how the headlines would describe how she “owned him”.

Despite looking forward to pooping in a bucket on a carbon made boat that emits no carbon (hoping they don’t need to fire up the emergency fossil fuel engines), she was forced to admit that “people can’t just take a sailboat across the Atlantic Ocean.” Spot on, Greta. However, she should take more comfort to know that the 280 million commercial airline flights every year contribute only 1.47% of human-made CO2 according to some of her biggest supporters – the EU. So on a global basis, airlines make up a mind-bogglingly frightening 0.00001825% of global CO2 emissions. Time to panic? If we increase our air travel 50% we’ll only match Germany for emissions…

Brain dead award the brainwashed

GQ Magazine has awarded Greta Thunberg with its Game Changer Of The Year award. Can we cynically argue that GQ is hijacking the stardom of the 16yo for their own commercial success?

CM has said for the longest time that she is indeed brave to do what she does and absolutely no criticism lies at her feet. What a shame she is the product of brainwashing from activist teachers and parents. The way political leaders fawn over her. Probably speaks volumes that so many of today’s world leaders have no progeny (France’s Macron – no kids. Former UK PM Theresa May – no kids. The Netherlands PM Mark Rutte – no kids. Swedish PM Kjell Stefan Löfven- no biological kids. Luxembourg PM Xavier Bettel – no kids. Scotland’s Nicola Sturgeon – no kids. Former EC President Jean-Claude Juncker – no kids, Japan’s PM Abe also has no children) meaning they don’t share the feelings experienced by an overwhelming majority of parents who eye roll whenever their 16yo pretend to be experts on any subject.

At least she channelled Melania Trump for her photoshoot. The ultimate form of irony.

As she sails across the Atlantic to the Americas in a boat part-owned by someone who owns a large chunk of a private helicopter transport fleet, we already knew her impact on a scheduled flight would have given her more face time. Note CM calculated her footprint would amount to 0.0000000000007314% of CO2.

Will organizers be waiting at the docks with a fleet of fossil fuel charged Teslas to whisk her away? As long as she uses the Aland Index to calculate the carbon footprint of her hotel stay to minimize her impact on the environment. If the hotel comps her bill the Aland Index will output zero emissions. For the sake of the planet let’s hope they do.

Youth Rebellion – more lefty lunacy

These people are truly unhinged. It just reads more and more like a totalitarian manifesto. ‘XR Youth’, ‘Extinction Rebellion Guardians’…’a new and healthier way forward for the organism‘…’a surprise occupation’. XR wrote,

“Extinction Rebellion UK’s recent strategy process was marked by a surprise occupation by XR Youth, with the support of the Extinction Rebellion Guardians team.

XR Youth demanded that young people be supported in co-creating a new and healthier way forward for the organism. XR Youth have been developing new ways of working and of organising actions, and proposed that their thinking needs to be at the heart of how Extinction Rebellion UK functions.

XR Youth also demanded that the proposed action at Heathrow Airport be dropped as they do not support an action at Heathrow at this time and in this way. It was unanimously agreed that the process for attempting to decide to have an action at Heathrow had been divisive, poorly conducted, and left many people across Extinction Rebellion feeling unheard and exhausted.

Extinction Rebellion has therefore decided that the action will neither be condoned nor supported as designed.

If an action with drones takes place at Heathrow it will be by an independent group outside Extinction Rebellion.

It was agreed that Extinction Rebellion do need to include actions that are highly disruptive, in which some people are willing to take personal risks with their own liberty or well-being in order to highlight the severity of the crisis. Such actions will inevitably be controversial and there will be a variety of views on them. The new approaches from XR Youth will help guide Extinction Rebellion UK through these challenges in the future.”

Are we to assume that a ‘drone’ action was proposed but knocked back? That a rogue element will still launch one to shut down the airport where XR will disavow any responsibility?

Do we take actions where “some people are willing to take personal risks” as sacrificial lambs who will be glorified in the struggle? Do we have any future Horst Wessel-esque martyrs that will be glorified by the XR Youth movement?

Seems like XR’s actions are likely to become more extreme and end up taxing public order beyond what is reasonable. These people have no shame. Their actions are likely to backfire. They should have their applications for protest restricted to areas that prevent becoming a broader public nuisance than they’ve already been.

The teenager and her big sister

The Guardian has published a conversation between the 16yo climate activist, Greta Thunberg, who recently told a group of adults they’re just “uninformed” and Congresswoman Alexandria Ocasio-Cortez, who thinks we should go out of our way to make air travel unnecessary.

For as much as The Guardian hypes this Skype call as the intellectual version of the Jamaican men’s 4x100m Olympic sprint team, CM think it is more like Eric the Eel and Eddie the Eagle.

Despite AOC’s Green New Deal being dismissed by her own party as a “green dream” and it losing 57-0 in the Senate, The Guardian paints her as a doctorate in her field. Sadly, her younger sidekick will soon receive an honorary degree from the University of Mons in Belgium.

Anyway, the manifesto of the left is all in this conversation – the politics of envy, the evil oil lobby, the importance of tokenism and of course a 16yo telling us that she knows best.

One of the telling lines from Thunberg runs,

I saw very recent numbers, I think it was yesterday, that suggested about 2% of Sweden’s population don’t believe in the climate crisis. Here it’s not as acceptable to not believe in it. Everyone accepts that it’s a fact. But still we aren’t talking about it, and it’s not a priority. We are just treating it like any other issue.”

Two points.

First, Thunberg explains the totalitarian propaganda shaming of it “not [being] as acceptable not to believe in it

Second, any politician staring at only 2% skepticism faces next to no risks to pushing a climate agenda. Take Ireland. It too has stated a climate emergency with a glossy Climate Action Plan 2019 yet the budget papers tell the complete opposite to crisis – 0.6% of total budget spend on the environment with a cap out to 2022. Hardly the actions of an emergency mandate…

In any event Thunberg plans to travel to the UN summit in NY on September 23rd. Given she doesn’t fly she is still committed to go there. She’ll need to sail because catching an ocean liner is far more polluting than an aircraft. Having said that, her wafer thin size catching a commercial flight won’t add any net emissions to those already in the air. SH can also take solace that the Virgin Group CEO has at least muttered we should consider not to fly to save the planet instead of shutting the airline down.

The good thing is that AOC has extended every courtesy to Thunberg when she arrives. To be honest she should be thrust onto the stage at the Democrat primaries to add to the hard left tack it has already taken. He’ll, she can even claim illegal status and vote for AOC in New York, which has just joined the other 650 group thinking councils around the world to declare a “climate emergency.”

Boeing raises 20yr forecast

Boeing reports airlines will need around 44,000 new commercial aircraft worth $6.8 trillion by 2038, vs. 43,000 planes worth $6.49 trillion estimated in 2018. The biggest demand will remain for single-aisle jets. 32,420 narrow-body planes are likely to be built.

So much for the fear of global warming induced by air travel. In total, planes are 2% of human induced CO2. Or 0.00024% of the CO2 in the atmosphere.

Although the International Air Transport Association (IATA) wilted to the gun held to its head by the UN. The IATA has got behind the movement to do its bit for climate change. In a two page flyer, it covered the idea that we reckless passengers must consider our carbon footprint but at the same time help the U.N. raise $40bn in taxes, sorry ‘climate finance,’ between 2021 and 2035.

The reality is if Greta Thunberg receives an invite by the Queensland government to lecture on climate change she can rest easy that the footprint in the air will be so tiny because there isn’t a diesel electric train to get here.