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‘Caveat Emptor’: United CEO says rival airlines may regret lack of vaccine mandates

Oct. 20, 2021
5 min read
A row of United Airlines passenger planes at Denver International Airport
‘Caveat Emptor’: United CEO says rival airlines may regret lack of vaccine mandates
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Confident United Airlines said Wednesday it will outperform competitors not only because its coastal hubs will benefit from rising international travel, but also because it prepared better for both the pandemic and the vaccine mandate that followed.

“Caveat emptor,” United CEO Scott Kirby declared on the carrier’s third-quarter earnings call, addressing passengers on unnamed competing airlines that are not requiring employees to be vaccinated. The Latin phrase means that buyers should be vigilant.

“We did a vaccine mandate,” Kirby said. “We did it truly for safety reasons. Other airlines are now backing off the requirement [and] are likely to have thousands of employees that need to be tested every week."

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“Imagine 1,000 employees on one day, calling in,” said Kirby, who foresees “a huge challenge for airlines not implementing vaccines."

“I don’t want that to happen,” Kirby said later, answering a reporter’s question. “I hope every airline will stop backtracking and will in fact get everyone vaccinated like United Airlines does.”

While United requires that employees be vaccinated, the other three largest U.S. airlines have varying policies. Delta has no mandate, but has higher health care costs for unvaccinated employees. On Tuesday, Southwest abandoned a plan to put unvaccinated workers with pending exemptions on unpaid leave after a Dec. 8 deadline. American, meanwhile, appears to be encouraging unvaccinated employees to apply for exemptions.

Kirby also said that United avoided the summer schedule meltdowns that have plagued other airlines because it planned better. Though he didn't name them specifically, Southwest, Spirit and American have all had operational hiccups this year..

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Read more: Here’s what’s behind the Southwest Airlines cancellations

United anticipated early on that the pandemic would last through 2021, Kirby said. In September 2020, the carrier negotiated a no-layoff deal with pilots; it then reached a deal with flight attendants. United was able to “avoid the conflict that happened at other airlines,” he said, and also avoid crew shortages. “The tone and environment at United is certainly different than what I read about in the press at other airlines,” Kirby said.

The airline industry has never before had to cut service by 90% and then ramp back up, Kirby noted. While United held back on its return, American was quick to push flights through its Charlotte and Dallas-Fort Worth hubs, making them two of the world’s busiest airports in the pandemic’s early days, while Southwest added new cities at a rapid rate. In summer meltdowns, both carriers suffered from inadequate crew availability.

Kirby cited not only strategic outperformance but also United’s longstanding gateway hub advantage, which includes what he says is the best East Coast hub in Newark and the best West Coast hub in San Francisco. The pandemic has hindered international travel far more than domestic travel, but when international travel returns United could be the biggest beneficiary.

Read more: When will international travel return? A country-by-country guide to coronavirus recovery

“During the pandemic, United’s geography has been a bigger headwind than at any other airline,” Kirby said. With both transatlantic and transpacific travel down 20% or more, “we’ve managed to produce results in line with the industry,” he said. But with transatlantic travel showing signs of recovery, and transpacific travel likely to recover in 2023, and with more wide-body aircraft than competitors, Kirby sees “a sustainable long-term advantage for the United network.”

On the call, Kirby and Andrew Nocella, United's chief commercial officer, cited various statistics showing that air travel is at an inflection point in its recovery.

For instance, Nocella said that in the past week, bookings for November and beyond are ahead of 2019 levels. Demand for transatlantic travel was up 19% on Wednesday compared with 2019, Brazil demand is recovering, domestic business demand has reached its pre-delta variant level, and award bookings recently exceeded their 2019 level for the first time since the pandemic.

For the third quarter, United posted better-than-expected results, with an adjusted loss per share of $1.02, compared with a consensus expectation for a loss of $1.67. Revenue was $7.75 billion, down 32% from the same quarter in 2019.

For the current quarter, United issued guidance pointing to a revenue decline of 25% to 30%, with jet fuel costs up significantly over last year’s level.

On Monday, U.S. regulators said that starting in November, foreigners can enter the country if they have proof of vaccination and a negative COVID-19 test. Peter McNally, global sector lead at the Third Bridge business research firm, said Wednesday that the news is welcome, but "United’s operations will be tested as international markets open up. So far, the international and business recovery expectations have been consistently pushed out."

Read more: The US reopens to international travelers on Nov. 8 — what you need to know

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

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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