United Airlines Hunkers Down For Long Air-Travel Drought

United Airlines Holdings Inc.

UAL 0.99%

Said that it is positioning itself to ride a long decline in air travel as a result of the coronovirus epidemic.

It was a brutal summer for American Airlines. Rising infection rates triggered new travel restrictions across the country, keeping travelers at home. Joint chief executive Scott Kirby has been among the most pessimistic about the depth and duration of the crisis, and the airline has flown less than rivals such as Delta Air Lines Inc.

lentils -0.03%

American Airlines Group Inc.

AAL 1.15%

And Southwest Airlines Co.

LUV 0.31%

During the epidemic.

The airline has said the strategy will help preserve cash for one final rebound. Chicago-based United on Wednesday reported a quarterly loss of $ 1.8 billion compared to a profit of $ 1 billion in the same period a year earlier. United’s sales fell 78% to $ 2.5 billion.

“We are now focusing on the airline’s position for a strong recovery,” Mr. Kirby said.

Airlines and Coronavirus Virus

With travel sluggish and low revenue demand, cash has become critical for airlines trying to make it through the most serious challenge in memory. United has raised $ 22 billion since the onset of the epidemic, including pledging its frequent flight program. $ 6.8 billion loan deal. It has reduced the amount of cash it burns each day to $ 25 million during the second quarter, including debt and severance payments.

There are some signs that the passengers are slowly returning. The number of people passing through airports climbed to their highest level since mid-March on Sunday. Delta, which reported a loss of $ 5.4 billion on Tuesday, said bookings are climbing over the holidays and winter.

Still, most predicts a complete recovery is afoot, and Mr Kirby said the epidemic will continue to weigh on demand for some time. International travel is difficult or impossible for many destinations, and companies have been hesitant to resume business travel.

United may also face more intense competition at some of its major hubs as travel resumes: Southwest said this week that it would take next year from Chicago’s O’Hare International Airport and Houston’s George Bush Intercontinental Airport Plans to start flights.

United employees have been one of its biggest sources of cost savings. Some 9,000 employees agreed to go shopping, retire early or go on extended unpaid leave.

Airlines were barred from layoffs with the aid of $ 25 billion given to them under a comprehensive stimulus package passed in March. They have lobbied for another round of government aid, but the United Nations worsened the health of more than 13,000 employees when the initial aid expired without a definitive path earlier this month.

United said it expects to charge $ 1.1 billion related to the cost of reducing its workforce, such as severance and other benefits. The fee includes approximately $ 500 million in future cash expenditures.

United’s pilots agreed to an agreement to accept lower pay to preserve all their jobs through June 2021, with some saying that United made it more quickly by avoiding rear and retain pilots Allowed to rebound.

On an adjusted basis, United reported a loss of $ 2.4 billion, or $ 8.16 per share, falling from a loss of $ 7.53 per share expected by analysts provided by FactSet.

Following an unprecedented drop in air travel due to coronaviruses, passenger airlines are being forced to make long-term, make-or-break decisions on times of great uncertainty and minimal cash flow. So how do they plan to survive? The WSJ detects. Overall: George Downs / The Wall Street Journal

Write Alison Sider to [email protected]

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On October 15, 2020, ‘United Airlines prepared for a prolonged drought in air travel’.


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