There’s no sugarcoating how disastrous the COVID-19 has been for America’s largest airlines. With air travel virtually at a standstill as people all over the world work from home and cancel vacations to slow the spread of the virus, Delta, Southwest, United and American Airlines all slid more than 60 spots down the rankings in Forbes’ annual Global 2000 list of the world’s largest public companies.
The four airlines’ cumulative market value declined more than 50% since the 2019 list a year ago. All four are far less profitable than they were last year—American slipped into the red, spurring a drop from 372nd to 967th on the overall list. And the worst numbers are still to come when they report earnings again this summer and fall.
The first-quarter earnings reports they released in April were bad enough, and lockdowns were only implemented in the U.S. in the last few weeks of the quarter. All major airlines are cutting most of their flights to account for nonexistent demand; United is cutting about 90% of its typical capacity in May and expects to do the same in June.
The industry is in such dire straits that the federal government stepped in to help. $25 billion of the $2.2 trillion stimulus package signed into law in April was earmarked for 10 passenger airlines in the U.S., though they have to pay back 30% of the aid in the form of 10-year, low-interest loans. To accept the aid, the airlines are required to avoid significant layoffs or salary reductions through September and can’t buy back their shares until a year after that.
Whether that will be enough to keep the airlines from going under depends on how long mandated shutdowns and consumer fears about the virus linger. With the U.S. death toll rapidly approaching 100,000, it’s impossible to pinpoint when the crisis will end. Delta CEO Ed Bastian said on the company’s first-quarter earnings call in April that the company burned $100 million in cash daily in March. It’s reducing that number to $50 million by June thanks to more than a third of its workforce taking voluntary unpaid leaves, but it can’t stay afloat indefinitely under those conditions.
International airlines are feeling the same pain. Major carriers IAG and Lufthansa each dropped hundreds of spots on the list as well. For the few airlines who rose from their positions last year, it’s fool’s gold. None of those companies had filed first-quarter financials before the April 30 cutoff in the Forbes database.
Transportation companies that aren’t so reliant on human passengers are still doing just fine. UPS remained the highest-ranking company in the industry, rising to No. 143 overall after first-quarter profits remained near $1 billion. Demand for rushed Amazon shipments is as high as ever, though UPS’ chief competitor FedEx did tumble out of the top 500.
America’s largest publicly-traded railroad, Union Pacific, also moved up a few spots to No. 183. Six of the top 10 transportation companies worldwide are railways in the U.S., Canada or Japan. The difference is certain to be even more pronounced next year: on the 2021 Global 2000, companies that whisk freight and cargo around the globe will generally be much higher than those that transport people.