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US carriers signal slow recovery with United Airlines planning to cut June flying by 90%

April 20, 2020
6 min read
US carriers signal slow recovery with United Airlines planning to cut June flying by 90%
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It may be time to start rethinking summer travel plans, especially if they involve flying somewhere.

United Airlines may fly about 525 flights a day in June, according to a securities filing Monday and Cirium schedule data. That's just 10% of the schedule it flew globally in June 2019, and equal to about what it had planned to fly daily from just its Denver (DEN) hub this summer.

"The U.S. consumer does not yet appear to be contemplating travel (either domestic or international)," wrote Raymond James analyst Savanthi Syth in a report on April 19 summing up the situation airlines face as they head into the summer travel season.

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United's likely 90% capacity cut in June is the most of any U.S. airline to date. American Airlines hopes to reinstate some international services and resume some domestic flying after up to 90% cuts in May, and Southwest Airlines plans to fly about half its schedule, or 2,000 daily flights, in June.

But all indications suggest that United's deep cuts may be needed as much of the U.S. remains under lockdown as the coronavirus pandemic continues to spread across the nation. Only five states -- Arkansas, Iowa, Nebraska, North Dakota and South Dakota -- do not have statewide orders asking residents to stay home, according to The New York Times.

The latest data from industry organization Airlines for America (A4A) shows net bookings, or new reservations minus cancellations, down more than 98% year-over-year during the week ending April 12. The data shows net bookings bottoming out over the past week or so.

Related: United Airlines loses $2B in first reported US airline coronavirus-crisis losses

Raymond James sees a similar trend. Syth wrote Sunday that demand appears to have stabilized at "bottomed out levels."

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But bottoming out -- and it's hard to go much lower than bookings down 98% -- does not mean a recovery is at hand.

"We need to be prepared for a very prolonged, sluggish travel environment," said Southwest CEO Gary Kelly in a video message on April 13. "We're just going to have to learn patience."

Related: Southwest CEO says airline hopes to avoid furloughs, dropping cities

Similarly, Delta Air Lines CEO Ed Bastian has told staff not to expect a recovery until the traveling public feels that it is safe to fly again. Something he has cautioned could take until there is a vaccine for COVID-19, which optimistically would take at least a year to develop.

"I don’t know what that pace of recovery will be,” he said on April 8. “It will really be dictated based on when customers feel safe to travel again in large numbers.”

In other words, no one knows when non-essential travelers will take to the skies again in any kind of significant numbers -- not airline executives, nor industry watchers or even public health officials.

Wall Street analysts expect U.S. airlines to be at least 25% to 30% smaller by year-end than they were at the end of 2019. This downsizing will involve parking hundreds of aircraft and reducing workforces by potentially over 100,000 people across the industry.

We do not know how this will translate into what airlines look like when the recovery begins. But it is safe to say, there will be a lot fewer flights and probably fewer nonstop routes -- unless one lives in places like Atlanta, Chicago or Dallas -- for the foreseeable future.

Related: How will airlines rebuild their route maps after the coronavirus?

Featured image by PA Images via Getty Images

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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.
4 / 5
Go to review

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10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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    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.

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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,300+ lounges, including Capital One Lounges and the Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023