United Airways Reviews $1.eight Billion Loss However Seems Forward to Friendlier Skies
Thursday October 15, 2020
As the coronavirus pandemic continues to weigh heavily on the travel industry financially, airlines are trying to shift their focus from stopping bleeding to planning a recovery. Confident Scott Kirby, United Airlines CEO, says recovery is “now visible” on the horizon, “although that recovery still seems a long way off.” The light at the end of the tunnel is far away, but this is it Turning point, “Kirby told reporters and analysts on a conference call Thursday. One reason for optimism is that United can now test travelers on the airport for COVID-19, with results in 15 minutes to see if a passenger has been infected, before boarding the plane. The rapid tests are only performed at the San Francisco airport for travelers traveling to Hawaii. If the test is negative, the traveler must upon arrival in Hawaii, which the tropical island nation required of all arriving travelers , Do Not Quarantine for 14 Days United Airlines executives say news of the rapid testing program caused an increase A The bleeding continues for the time being. United reports that weaker than expected demand for air travel during the summer months resulted in a larger than expected loss of nearly $ 2 billion in the third quarter. On Tuesday, rival Delta Air Lines reported a loss of more than $ 5 billion in the third quarter. The number of people flying commercially has fallen since March. According to the Airlines for America industry group, air travel demand fell 94% at one point in April, and after a brief spike in June and early July, demand fell 65% to 70% in August and September compared to the same Months of the previous year. And that depresses the bottom line of the airlines. Overall, sales fell 78% in the third quarter. Passenger revenue declined 84% from July, August, and September last year when the airline posted more than $ 1 billion in profit.
The only bright spot was a 50% increase in air freight sales. Although United cut operating costs by nearly 60%, the airline burned cash at the rate of $ 25 million per day in the third quarter. This is a decrease from a daily cash burn rate of $ 40 million per day in the second quarter. United began vacationing 13,000 employees on October 1, when a federal payroll support program expired, and talks to extend that aid remain stalled. United has promised to put these full staff back on the payroll if Congress and the White House reach an agreement that the airlines receive additional aid soon. Kirby says the coronavirus pandemic sparked “the worst financial crisis in aviation history,” and admits that the “negative effects of COVID-19 are likely to continue in the near future.” “We won’t get through this until there is a widespread vaccine, probably towards the end of next year, so we have (another) 12-15 months of pain, sacrifice and difficulty,” Kirby said. “But we did everything in the early stages to have trust and it is really about trust to overcome the crisis and get to the other side.” Aviation industry analysts and airline executives say there seems to be a pent-up demand for air travel as many people enjoy flying and escaping, even for short trips. They expect recreational and warm weather destinations to lead to a recovery in air travel. However, the bigger drag on United and its main competitors Delta and American was the sharp decline in the more profitable business travel sector. Many business travelers tend to book later and even at the last minute and are willing to pay higher prices for better schedules and perks like business class seating. United said business travel has dropped 85-90% due to the pandemic, and CEO Scott Kirby believes business travel will not recover as quickly as vacation travel. “Business travel is incredibly important to United,” said Kirby. “It used to be our bread and butter. I think it will be our bread and butter in the future. (But) it will be a couple of years before things get serious again,” added Kirby not expecting business trips however, disagrees with those who believe that Zoom, GoToMeeting, and other video conferencing platforms will replace face-to-face business meetings and sales pitches. “We’re social beings. And I think the demand will come back,” said Kirby. “I used to like to say that the first time someone loses a sale to a competitor who showed up in person is the last time they try to make a sales call to Zoom.”
Copyright 2020 NPR. Further information is available at https://www.npr.org.
KPBS ‘daily news podcast on local politics, education, health, the environment, border and more. New episodes are ready on weekday mornings so you can overhear your morning commute.
Download Acrobat Reader to view PDF documents.