The coronavirus has pummeled airlines in the United States, especially in recent weeks, but the industry is prepared to suffer the blows.
That’s what a parade of chief executives from the major carriers said Tuesday at an online-investor conference convened by J.P. Morgan, even as they announced deep cuts to flights, spending, hiring and their own salaries.
The moves are intended to conserve cash in response to an outbreak that has drawn comparisons to the worst disasters confronting the industry in recent decades, including the global financial crisis and the Sept. 11 terrorist attacks. This time, however, they and industry analysts say the airlines may have learned their lesson.
“This is what they’ve prepared for,” said Helane Becker, managing director and senior airline analyst at Cowen. “Every C.E.O. that’s running an airline today was involved in the airline industry in some capacity in 2001 and 2008.”
A critical difference between this crisis and those of the past is how quickly the industry has responded, Ms. Becker said.
Domestic bookings began to weaken significantly only in the last two weeks, but since then the major airlines have suspended their earnings forecasts, announced deep cuts to service, eliminated most change fees, frozen hiring and put big spending plans on hold.
“Our overarching goal during this time is cash preservation,” Ed Bastian, the chief executive of Delta Air Lines, said at the conference in New York.
After a steep decline in net new bookings, Delta said it would slash service by about 15 percent, with the largest cuts focused abroad. It said domestic service, which accounts for nearly three-fourths of its revenue, would be reduced between 10 and 15 percent.
American Airlines said Tuesday that it would reduce international service during the peak summer season by about 10 percent, including more than half of its trans-Pacific flights. The airline also said it would slim down domestic service by about 7.5 percent in April.
United Airlines announced comparable cuts last week and said in a Tuesday securities filing that its chief executive, Oscar Munoz, and its president, Scott Kirby, would forgo their base salaries at least through June. Gary Kelly, the chief executive of Southwest Airlines, told employees on Monday that he was taking a 10 percent pay cut.
In the last three or four days, United has seen a 100 percent decline in net bookings to Asia and Europe, based on a combination of new bookings and cancellations, Mr. Kirby said on Tuesday. Domestically, net bookings are down about 70 percent.
He and his team are planning for a worst case in which demand declines deeper and longer than it did after the Sept. 11 attacks, even though the company does not expect that to happen, he said.
“Even under this level of industry stress, we’ll survive this crisis without impairing our long-term financial prospects,” Mr. Kirby said.
Except for Mr. Kelly, the chief executives all spoke at the conference, where they addressed anxious investors, but it was a vague comment from President Trump on Tuesday that seemed to bolster airline stocks, which recovered some of their recent losses.
Speaking to reporters at midday, Mr. Trump said the federal government was ready to support the cruise and airline industries, adding, “We are helping them through this patch.”
American’s shares, which had lost half their value in the past month, ended the day with a gain of 15 percent. United, Delta and Southwest shares also rose.
Government assistance may be appreciated, but the chief executives insisted that it wasn’t needed.
“Had something as significant as this coronavirus occurred any time before 2013, we would have already seen multiple restructuring firms hired along with a frantic, concerted effort from our industry for government assistance,” said Doug Parker, American’s chief executive, a sentiment echoed by United’s president. “Instead, while in Washington, D.C., last week, not one C.E.O. asked for government financial relief.”
The International Air Transport Association, an industry group, said last week that the coronavirus could wipe out between $63 billion and $113 billion in worldwide airline revenue this year. But the airline executives speaking Tuesday said their companies were financially prepared to withstand the flagging demand for flights.
Mr. Parker said American had more than $7.3 billion in liquid assets — more, he said, than any other airline in the world — and about $10 billion in unencumbered assets, including aircraft. Delta said it expected liquidity of at least $5 billion by the end of the first quarter and had $20 billion in unencumbered assets. Mr. Kirby of United said his airline had $8 billion in liquidity, including $2 billion in new financing it raised on Monday.
“The group had started the year in pretty good to very good balance-sheet shape,” Stephen Trent, an airline analyst with Citigroup, said, though he added that American began 2020 with a lot of debt.
United, American and Delta all said they had halted buybacks of their stock after a big spree in recent years. Last year, those airlines and Southwest spent a collective $6.8 billion on share repurchases, up from $5.7 billion in 2018. (The high was $11.5 billion in 2016.)
United made its decision in late February, after the virus spread to Italy. The airline had its board’s approval to repurchase around $3 billion in shares under a program approved last July, and has been an enthusiastic buyer of its own stock.
In the last five years, United has spent $8.6 billion on buybacks. Delta, which announced its halt on Tuesday, has spent $10.1 billion on buybacks over the same period, while American has spent $11.9 billion. Southwest, which has not said whether it is suspending its program, has spent $8.5 billion buying back shares over the past five years.
Several airlines said they were offering employees voluntary leave, parking or redeploying aircraft and taking other measures to reduce costs.
Delta also said it stood to benefit from a steep decline in fuel costs, estimating that it would save $2 billion over the year. American said it expected to save about $3 billion for the same reason.
Jason Karaian contributed reporting.
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