United Airlines sees positive uptick in flight searches, but only for travel next year
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United Airlines does not sugar coat pandemic reality. The travel industry has hit bottom and there are few, if any, signs that people are ready to fly again.
New bookings for the Chicago-based carrier are at “net zero” — or bookings minus cancellations — with no near-term sign of improvement, United president Scott Kirby said during a first quarter earnings call Friday. The airline has responded by slashing schedules by 90% through June.
“The real issue for us about demand is going to be that people feel safe and have some reason to travel,” he said, noting that guaranteeing clean planes alone will not get people back in the air. “Disney World needs to be open… Cafes and museums in Paris need to be open before people go back, and conventions need to be open and running.”
Few Americans are traveling. The latest Transportation Security Administration (TSA) screening data shows just 154,695 people passed through airport checkpoints on April 30, just 6% of the number a year ago. The number of screenings is up slightly from a low of 87,534 on April 14.
In addition, more than 3,000 planes flown by U.S. carriers are idled having not flown during the week ending April 28, according to data from the trade organization Airlines for America (A4A).
Airlines are accelerating aircraft retirement plans to cut costs amid near-zero demand. American Airlines has removed five types from its fleet — Airbus A330-300s, Boeing 757s and 767s, Bombardier CRJ200s and Embraer E190s — and Delta Air Lines will remove its McDonnell Douglas MD-88s and MD-90s in June.
United, for its part, does not yet have plans to retire any of its more than 800 jets. To date, it has only “temporarily parked” aircraft pending a better view of the recovery before any decisions are made, the airline’s chief financial officer Gerry Laderman said on Friday.
United did leave analysts with at least one seed of optimism. The airline is seeing more searches on its website for travel in the spring of 2021 than it did last year for travel this spring, Kirby said.
But a 2021 recovery is a long, long way off. And next year is well after the air service and staffing protections of the government’s coronavirus aid package, the CARES Act, expire on Sept. 30.
‘We are planning for the environment to possibly continue at essentially net zero passenger revenues for the rest of the year and into 2021,” said Kirby. “We aren’t projecting that, and certainly hope it’s better than that, but we are planning for the possibility.”
United is prepared to make difficult strategic decisions based on what it sees over the next few months. These could include involuntary furloughs or layoffs of staff, or even closing one of its eight hubs.
The carrier reported a $1.7 billion net loss — its first since 2014 — in the first quarter. It aims to reduce its daily cash loss to $40 to $45 million by the end of June.
Cowen analyst Helane Becker said in a report Friday that United’s daily loss projections are a result of the airline’s quick response to the COVID-19 crisis. United was the first U.S. carrier to cut domestic capacity in early March.
Both American and Delta aim to get their daily loss, or how fast they are going through the cash in their bank accounts, to around $50 million a day by June.
Featured image by Michael Ciaglo/Getty Images.
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