It’s likely that no sudden crisis in the annals of American capitalism has unleashed greater devastation on any industry than the coronavirus’s blow to U.S. airlines. Start with the 80% to 90% drop in ticket sales, and social distancing precautions that leave middle seats empty and the few planes airborne often half-full. Then add the prospect that companies will sharply curb pricey business travel, and the gigantic accumulation of debt required to buck those many headwinds, and it would be logical to conclude that this critical sector can’t survive in anything like its current form.

“How do you design an industry for 40% of the traffic it was getting the year before—and that’s the best-case scenario for 2020?” says Joe Brancatelli, publisher of the business travel site JoeSentMe.com. “We could be facing a wave of bankruptcies or even reregulation. The new normal is impossible to predict.”

Brancatelli’s warning is well aimed. If the lockdown extends far longer than expected, or fear of packed planes prompts Americans to shun air travel well into the future, it’s possible that only government intervention can save the industry. In that case, the airlines would operate as public utilities, where U.S. agencies set prices ensuring carriers cover their costs––the system prior to deregulation in 1978––or the U.S. could provide antitrust relief, enabling the airlines to jointly set fares in an OPEC-style cartel.

But the most likely outcome is that today’s major airlines return to health within three years, and that the Big Four that rule the skies today––American, United, Delta, and Southwest––will still be dominant in post-virus America. The big difference? “The major carriers will be 10% to 20% smaller than they are now,” says a former industry leader. “In the near term, it will be ugly. We’ll see painful restructurings, but probably not bankruptcies for the majors.”

In his view, the airlines will succeed in substantially shrinking the “capacity,” meaning the number of seats offered on their routes. They’ll get there by trimming their fleets. The majors will ground older planes, not just fuel guzzlers but all save for the most fuel-efficient jets. “They’ll emerge with smaller, more efficient fleets,” he says. “The crisis will lead them to overshoot in the direction of less capacity.”

Of course, we don’t know how many people will be flying three years from now. But the shrinkage in seats being offered on busy routes means that flights will be even more packed than in recent years, and prices won’t be any lower. “The result is that the carriers will be getting more revenue for each square foot on the plane,” says the former executive.

The airlines should also benefit from what looks like an extended period of low oil prices that will curb the jet fuel bill that last year accounted for 30.3% of the Big Four’s operating costs. “If robust economic growth returns, then all three things that have always formed the formula for success, GDP, capacity, and fuel costs will be working in the airlines’ favor,” adds the ex-airline honcho.

The industry sustains the power to rebound for a basic reason: The overwhelming dominance of the majors. The Big Four handle 86% of U.S. traffic, and at around half of America’s 100 largest airports, a single carrier offers the majority of seats. It’s the three “network carriers,” Delta, American, and United that build and defend those “fortress hubs,” including strongholds for Delta in Atlanta, American in Dallas, and United in Minneapolis. The majors have tightened their grip to the point where just one or two carriers serve well over half of America’s 100 busiest domestic routes, according to estimates from Kevin Mitchell, chief of consumer advocacy group Business Travel Coalition. On many of those big city-to-city pairs, a single airline holds a market share exceeding 70%.

For now, the overriding challenge is surviving what looks like a terrifying, even fatal, cash crunch. Surprisingly, the big carriers did so much to bolster their finances since the Great Recession that they harbor the borrowing power and cash reserves, when augmented by a promised $50 billion in federal relief, to keep their wings level during the hurricane.

Let’s examine three big issues for the U.S. airlines: the scale of their coming losses, the debt building on their balance sheets, and the flight path that could steer them through to clear skies.

Horrendous losses are on the way

The fall in passenger traffic since early March is staggering, and dwarfs the drop following 9/11. On March 1, 2.3 million passengers boarded flights at America’s airports, almost exactly the same number as on that date last year. Six weeks later, on April 14, the flow of passengers had shriveled to 85,000, and as of May 18, the carriers were transporting just 244,000 customers, one-tenth the hordes from a year before.

“The entire month of March had slightly more customers than in September 2001,” the month of the 9/11 terrorist attacks, says Brancatelli. “Only this time, the collapse has already lasted for over two months and will last a lot longer.” In October of 2001, traffic rebounded by one-third from September. By contrast, the damage from the coronavirus kept deepening: Since the start of April, 85% fewer passengers a day are boarding flights than in March. Brancatelli notes that quintupling the count in mid-April would get the U.S. back to just 40% of the traffic in February.

The wipeout translates into huge, sudden losses. Delta anticipates that its passenger revenues will drop 90% in the second quarter, from last year’s $11.4 billion to less than $150 million. For 2020, Fitch Ratings, the fixed-income research firm, forecasts that the Big Four will lose $17.2 billion, led by American (–$6.2 billion) and United (–$5.5 billion). If that happens, the majors will suffer a vertiginous descent of $29 billion from last year’s $11.8 billion in profits. A $17 billion-plus deficit for this year would be equivalent to erasing 94% of the Big Four’s $31 billion earnings over the fat years from 2017 through 2019.

Debt loads are soaring

U.S. airlines are grounding more than half the 6,200 planes in service before the crisis and have shrunk schedules substantially. Southwest will cut over 40% of its 3,700 daily flights from May 3 through June 10, and United is suspending 90% of its service in May and expects similar reductions in June. But airlines are a classic high-fixed-cost business, where players must cover lease and interest payments on huge fleets and rent on airport gates and pay full crews whether a flight is half-full or chockablock. Hence, a small drop in “load factor,” the share of available seats filled by passengers, can turn strong profits into steep losses. For example, a drop in American’s load factor by just four points, from last year’s 85% to 81%, was enough to push its results below breakeven.

The drop in traffic on this never-before-witnessed scale makes it impossible to trim flights fast enough to bring revenues in line with those big fixed costs. As a result, the Big Four are bleeding tons of cash, and piling on debt to fill the gap. In April, Delta’s cash burn was $100 million a day, and its goal was reaching $50 million a day by June.

The U.S. passenger airlines are benefiting from provisions in the coronavirus relief bills, providing around $18 billion in grants and another $32 billion in low-interest loans––about $8 billion of those loans carry a coupon of just 1% for the first five years. But the Big Four are also tapping far pricier credit from the capital markets. In late April, Delta announced plans to raise $3 billion, half from a term loan and half from a secured fixed-income offering, and in early May, United raised $2.25 billion on bonds-backed by aircraft at a rate of around 10%.

At the end of 2019, the Big Four held $53 billion in debt. Delta and Southwest were lightly leveraged, United’s load was moderate, and American was already heavily burdened, shouldering around 40% of the quartet’s total. Jonathan Root, an analyst with Moody’s Investors Service, forecasts that the Big Four will add between $35 billion and $45 billion in new borrowings this year, or 66% to 85%, to their pre-virus totals.

A tall scaffold of debt is the Big Four’s essential bridge to the recovery.

The Big Four need a big comeback to level that new mountain of debt

Root says it’s impossible to know how fast demand will recover. But he did model a hypothetical scenario where traffic returns to 2019 levels in 2023. The former top industry executive cited forecasts in which a recovery will happen earlier. During the long slump, the Big Four can lower capacity and shrink their workforces sufficiently to break even at 50% to 60% of last year’s volumes, says Root. If traffic does bounce back to 2019’s robust levels, Root foresees that the big majors will be spinning plenty of extra cash, and using most of it to pay down all that pandemic-survival debt. “The additional cash could come from three places,” he says. First, he notes that the Big Four returned $8.3 billion to shareholders in dividends and buybacks last year. It’s likely that they would forgo both in a recovery and channel a like amount of funds into lowering debt. Second, the carriers could temporarily lower their capex by 50% from $15 billion at 2019 volume levels to $7 billion to $8 billion.

A final windfall would be the clincher. Last year, the majors spent $31 billion on jet fuel, at an average oil price of $63 per barrel. At today’s $35 per barrel, they would save $16 billion on fuel. Of course, it’s by no means certain oil will stay that inexpensive three years from now, but world markets are signaling a new era of bargain crude.

Add it up, and the majors could find $30 billion for repaying the gigantic extra borrowings that bore them through the crisis––at a demand level matching 2019. If that takeoff plays out, America’s airlines will have accomplished what may now look like mission impossible. But it isn’t so impossible. The Big Four have learned the hard way to favor profits over invading one another’s turf and coexistence over price wars. What they’ve got going is what made them winners over the past few years: market power.

The sight of the carriers working the controls to regain their old cruising altitude could prove a surprise spectacle in post-pandemic America.