United Airlines CEO warns of a smaller carrier post-coronavirus

Mar 27, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

United Airlines‘ leaders are warning that the carrier is likely to emerge smaller from the novel coronavirus pandemic than when it entered, joining Delta Air Lines executives in forecasting long-lasting cuts.

“We will continue to plan for the worst and hope for a faster recovery,” United CEO Oscar Munoz and president Scott Kirby said in a letter to staff on Friday. “[But] if the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today.”

The Chicago-based carrier has cut capacity by more than 60% in April and is planning deeper cuts in May and June as load factors, or the percentage of occupied seats on its flights, have fallen into “the teens or single digits.”

Get Coronavirus travel updates. Stay on top of industry impacts, flight cancellations, and more.

United’s forecast echoes the one presented by Delta finance chief Paul Jacobson last week. In a webinar with employees, he said: “We’re going to be smaller coming out of this. Certainly quite a bit smaller than when we went into it.”

The International Air Transport Association (IATA) anticipates the recovery from the COVID-19 crisis to be longer than six months. The timeline will be drawn out based on how bad the expected economic recession is with leisure travelers coming back before more lucrative business ones.

“The challenge though is that recovery is unlikely to come very quickly,” IATA chief economist Brian Pearce said in a briefing on March 24.

Delta is the second-largest domestic carrier and United the fourth, U.S. Department of Transportation (DOT) data shows. Delta carried nearly 22% of the 811 million travelers that flew in the U.S. in 2019, and United carried just over 16%.

Related: United Airlines reinstates 6 long-haul routes to latest coronavirus cuts

Both Delta and United have asked staff to take voluntary unpaid leave, or even early retirement offers, to reduce staffing numbers. This comes even as Congress passed an aid package with $50 billion for airlines, including $25 billion in grants dedicated to employee compensation and benefits. The grants come with strings that bar airlines from furloughing or cutting staff pay, or ending service to any U.S. destination before Sept. 30.

But come October, a smaller United will need fewer employees as Munoz and Kirby warn. Hence the offers that aim to cut payrolls voluntarily before the aid runs out.

“This federal assistance buys us time to adapt to this new environment and assess how long it will take for our economy to begin to recover,” they said.

More: What the airline aid package means for travelers

Related: Delta to emerge a much ‘smaller’ airline from coronavirus crisis

Featured image by Niall Carson/PA Images via Getty Images.

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
  • Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
  • Earn 1X Miles on all other eligible purchases.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA Pre✓®.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Regular APR
15.74%-24.74% Variable
Annual Fee
$250
Balance Transfer Fee
N/A
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.