Airlines turn market darlings after Covid-19 forced financial clean-up

Unloved during the Covid-19 pandemic as their businesses were incapacitated almost overnight, airlines that cut back to survive the crisis are now blowing through profit forecasts and luring back investors. Virgin Australia, so financially frail when Covid-19 hit in 2020 that it folded in weeks, has undergone a remarkable transformation under new owner Bain Capital. Free of much of its debt after exiting administration and with a scaled down fleet, the airline is making money for the first time in years. It plans to relist in Sydney, possibly in 2023. These freshly – and forcibly – streamlined carriers are capitalising on a surge in travel since virus restrictions fell away. The ICAO expects passenger demand to recover to pre-Covid-19 levels on most routes this quarter, and then to about 3% higher than 2019 levels by the end of 2023. “Aviation is investible again,” said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners in Sydney. “Asian airlines are going to go through the roof.” A Bloomberg gauge of 29 airlines from around the world has climbed almost 30% since the end of September. The reopening of China, the largest outbound travel market before the pandemic, should drive a fresh traffic rebound in and out of favoured destinations like the United States, Japan and Singapore. In Hong Kong, hammered by China’s shutdown, Cathay Pacific Airways will in 2023 make its first profit since 2019, according to analyst forecasts. It is an extraordinary turnaround for an industry that suffered losses approaching US$200b (S$268b) over the past three years.<br/>