Helane Becker, Cowen senior research analyst, joins ‘The Exchange’ to discuss the airline trade and where to find opportunities in the sector. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

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BREAKING: Recession News

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Airlines have always been one of the most sensitive industries when it comes to economic indicators, and Cowen’s Helane Becker believes that they are already anticipating a recession. Her analysis is based on the fact that airlines and airports are taking steps to cut down on expenses, both in terms of staff and capital expenditures.

Becker cites several examples of airlines and airports that are making cutbacks. For instance, Delta Air Lines recently announced that it would be offering voluntary severance packages to some of its employees as part of its cost-saving efforts. Similarly, American Airlines has also announced voluntary leave and early retirement packages, while United Airlines has announced that it will be reducing capital expenditures by $2.5 billion this year. Meanwhile, airports such as San Francisco International Airport (SFO) have seen a sharp drop in passenger numbers and are therefore reducing their budgets accordingly.

These cutbacks are a clear indication that the airlines and airports are bracing themselves for a potential recession. In fact, some airlines have already been hit hard by the current economic slowdown. For example, Southwest Airlines recently reported a net loss of $94 million in the first quarter of 2020, largely due to lower demand and higher operating costs.

According to Becker, the airlines and airports are taking a cautious approach to their operations in order to conserve cash and ensure their survival in the long term. She believes that this strategy is the right one, as the airlines will need to be resilient in order to survive the economic downturn. In addition, it may take some time for demand to recover even after the pandemic is over, as many customers are likely to be hesitant about traveling until the situation stabilizes.

The good news, according to Becker, is that the airlines are better prepared for a recession now than they were during the financial crisis of 2008. Back then, many airlines were struggling with high debt levels and were therefore vulnerable to the economic downturn. However, the situation is different today, as many airlines have improved their balance sheets and have greater liquidity thanks to low fuel prices.

Overall, Becker’s analysis suggests that the airline industry is bracing itself for a tough few years, but that it is better prepared to weather the storm than it was before. With careful management and cost-cutting measures, the airlines may be able to survive the recession and emerge stronger in the long run.