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United Airlines says revenue is down by $100M a day because of coronavirus

April 02, 2020
4 min read
United Airlines says revenue is down by $100M a day because of coronavirus
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Daily revenues at United Airlines have plummeted along with passenger numbers as travelers heed warnings to "flatten the curve" and stay home amid the novel coronavirus pandemic.

The Chicago-based carrier's revenue is down by "over $100 million a day" as planes fly with around just 15% of seats filled this week, United president Scott Kirby told employees in a virtual town hall viewed by TPG on Thursday. This comes even as the airline slashes nearly 70% of its schedule in April with further cuts likely for May.

A revenue drop of that much, even with some cost savings, is a dire place for any business to be.

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

United will seek some of the $25 billion in grants available for employee compensation from the U.S. government, CEO Oscar Munoz said during the town hall. The company also will "consider" applying for some of the $25 billion in loans.

“One of the lessons from this is our stress test from 9/11 wasn’t stressful enough," Kirby said in reference to United's preparations and need for cash to keep operating.

Airlines around the world are taking a hit. The International Air Transport Association (IATA) has warned that half of global airlines could collapse or be acquired due to the cash crunch resulting from the pandemic without government aid. Numerous carriers have suspended all but critical routes, idling thousands of jets.

In the U.S., the images of American Airlines, Delta Air Lines, Southwest Airlines and United tails parked at airports across the country is a harrowing reminder of just how quickly the virus decimated air travel.

Related: United Airlines CEO warns of a smaller carrier post-coronavirus

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American, Delta and United regional jets temporarily parked at the Pittsburgh airport. (Photo courtesy of Pittsburgh International Airport)
American, Delta and United regional jets temporarily parked at the Pittsburgh airport. (Photo courtesy of Pittsburgh International Airport)

United has not decided whether to permanently retire any jets as a result of the coronavirus, said Kirby, who emphasized flexibility for the recovery.

“If we want to emerge stronger, if we want to emerge the world’s leading airline on the other side of this, we have to have flexibility," he said. This includes having aircraft ready to return to service when they are needed.

However, United's Boeing 757s would be the first to go followed by its Boeing 767s, including the popular "high-J" 767 configuration, said Kirby. The airline would look at retiring some of its Airbus A320 family jets after that.

One positive note: United is likely to keep few of the all-economy regional jets with 50 seats — the Bombardier CRJ200 and Embraer ERJ-145 — after the crisis, said Kirby. These aircraft, while common on routes to small cities, are unpopular with travelers.

The carrier flew 74 757s and 54 767s, as well as 177 A319s and A320s, at the end of December, its latest fleet plan shows. It had 308 50-seat jets in its feeder operation, including 43 with Trans States Airlines that shut down on April 1.

Related: It may be years until passenger demand returns to 2019 levels for US airlines

Featured image by Photo courtesy of United Airlines

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
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Go to review

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10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
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  • Intro Offer
    Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

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  • Annual Fee

    $550
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
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Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more