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

Apr 2, 2020

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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

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 courtesy of United Airlines.

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