United Airlines Reports $1.8 Billion Loss But Looks Ahead to Friendlier Skies

Uniteds almost empty terminal at OHare International Airport in Chicago in April.

David Schaper/NPR

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David Schaper/NPR

Uniteds almost empty terminal at OHare International Airport in Chicago in April.

David Schaper/NPR

According to the industry group Airlines for America, air travel need fell 94% at one point in April and after a short uptick in June and early July, demand dropped 65% – 70% in August and September compared to the exact same months last year. The bigger drag on United and its primary rivals, Delta and American, has actually been the considerable drop in the more successful organization travel sector. United says its corporate travel is down 85 to 90% because of the pandemic and CEO Scott Kirby says he doesnt expect it to healing as quickly as leisure travel will.
” Business travel is incredibly essential to United,” said Kirby. And I believe the demand is going to come back,” Kirby said.

As the coronavirus pandemic continues to take a huge financial toll on the travel industry, airlines are trying to move their focus from stopping the bleeding to planning for a healing.
United Airlines CEO Scott Kirby is expressing self-confidence, saying a healing is “now noticeable on the horizon,” despite the fact that healing still appears to be a long way off.
” The light at the end of the tunnel is a long way away, however this is the turning point,” Kirby informed press reporters and analysts on a conference call Thursday.
One reason for the optimism is that United is now able to evaluate travelers at the airport for COVID-19, with outcomes in 15 minutes, to figure out whether a guest has been contaminated before they board the aircraft.
The rapid screening is being done only at San Franciscos airport for tourists going to Hawaii. If the test returns unfavorable, the traveler will not have to quarantine for 14 days upon arrival in Hawaii, which the tropical island state had actually been requiring of all inbound travelers.
United Airlines executives say news of the rapid testing program has actually led to a boost in reservations to Hawaii.
For now, the hemorrhaging continues, with United reporting that weaker than anticipated air travel need over the summer months assisted develop a larger than anticipated 3rd quarter loss of nearly $2 billion. On Tuesday, rival Delta Air Lines reported losing more than $5 billion in the 3rd quarter.
Since March, the number of individuals flying commercially has actually plunged. According to the industry group Airlines for America, air travel need fell 94% at one point in April and after a brief uptick in June and early July, demand dropped 65% – 70% in August and September compared to the very same months in 2015. Whichs crushing the airline companies bottom lines.
United says in general, earnings fell 78% throughout the third quarter, with traveler earnings down 84% from July, August and September in 2015, when the airline company made an earnings of more than $1 billion.

The one bright area was a 50% boost in income from flying cargo.
And even though United has actually reduced operating costs near to 60%, the airline burned money at a rate of $25 million a day in the third quarter. Thats down from a daily money burn rate of $40 million a day in the second quarter.
United started furloughing 13,000 staff members Oct. 1 when a federal payroll assistance program ended, and speak to extend that aid remain stalled. United has actually assured to bring those fuloughed workers back onto the payroll if Congress and the White House reach a contract on offering airline companies with the additional help soon.
Kirby says the coronavirus pandemic has actually created “the worst financial crisis in air travel history” and he acknowledges that the “unfavorable impact of COVID-19 will likely persist in the near term.”
” Were not surviving this till theres a commonly readily available vaccine, most likely around the end of next year, so weve got (another) 12 to 15 months of trouble, sacrifice and pain ahead,” stated Kirby. “But we have actually done what it takes in the preliminary stages to have self-confidence, and its really about confidence, on getting through the crisis and to the opposite.”
Air travel market analysts and airline executives state there does appear to be pent up need for flight, as numerous individuals are eager to fly and escape, even for short trips. They expect leisure, warm weather condition locations to lead an air travel healing.
However the larger drag on United and its primary competitors, Delta and American, has actually been the considerable drop in the more successful business travel sector. Many service tourists tend to book later and even eleventh hour, and theyre ready to pay greater rates for better schedules and perks like organization class seating. United states its business travel is down 85 to 90% since of the pandemic and CEO Scott Kirby states he does not anticipate it to healing as quickly as leisure travel will.
” Business travel is extremely crucial to United,” said Kirby. “It was our support before. I think it will be our bread and butter in the future. (But) Its going to be a few years prior to it returns in earnest,” including that he doesnt anticipate service travel to recover to near pre-pandemic levels until 2024.
However Kirby does not agree with those who think Zoom, GoToMeeting, and other video conferencing platforms will change in-person service meeting and sales calls.
” We are social animals. And I believe the need is going to return,” Kirby stated. “Ive loved stating the very first time someone loses a sale to a competitor who appeared in person is the last time they attempt to make a sales call on Zoom.”