United Airlines CEO Scott Kirby is not worried about the omicron variant and even views it as a potential turning point in moving from a pandemic to endemic. While he made no long-term promises, Kirby also said United has no plans to require employees to receive a COVID-19 booster shot.
United Airlines CEO Scott Kirby Does Not Appear Worried About Omicron Variant
Speaking to employees outside the U.S. Capitol in Washington DC in a video message shared with Live and Let’s Fly, Kirby explained that omicron may impact the resumption of certain international service, but will not be a drag on United’s 2022 outlook:
“My guess is that omicron is going to represent three steps forward, one step back in terms of demand in our recovery. Delta was probably two steps forward, and one step back. We’ll take a little bit of a dip in demand for the next couple of months We may slow some of our international return to service early next year because demand doesn’t come back yet. But by the time we get to next summer, nothing has changed about our forecast. By the time we get to 12 months from now, nothing has changed about our forecast.”
Kirby also explained the idea that omicron appears to follow the expected evolution of other viruses, which become more contagious but are less severe. There is hope that a more contagious, less severe virus will help nations reach herd immunity, the same way the Spanish Flu a century earlier eventually ended.
United’s Debt Payments May Be Delayed
One downside to the omicron variant is that it may delay short-term demand. While this variant will not cause United to change focus, reduced demand will reduce revenue, necessitating a slowdown in debt servicing.
“And what this emphasizes for really is that things that we were focused on before remain important. Financially, we’ve got to pay down our debt. You know the disappointing thing about something like omicron is that it keeps us treading water financially. We’re kind of at this break even cash flow level, and we really can’t start paying down that debt. We took on $20 billion of extra debt as we went through the crisis. We need to pay that down to pay for the 500 something airplanes that are going to be delivered in the next few years. But we’ll get back to doing that a few months from now.”
Even so, United finds itself in a better debt position than its competitor American Airlines and there are no longterm liquidity or servicing concerns.
No Mandatory Boosters (Right Now)
Even as Kirby admitted that the vaccine many not be as effective as originally hoped for, he frequently underscored the importance of being jabbed.
“I know it wasn’t a unanimous view on our vaccine requirement here at United but this really emphasizes the fact that COVID is not over. It’s going to continue to be with us and we’re all going to be safer if we get vaccinated.
“We don’t have any announcements to make. I would encourage everyone to go get their boosters. I have gotten my booster. I’m not at this time planning to do anything to require it. We’ll see what happens with the different variants over time. But I can assure you that all of you are safer if you do it.”
Kirby hedges his bet by inserting the “at this time” caveat, but will not require employees to receive a booster shot. Over 99% of United employees who did not seek a religious or medical exemption have been vaccinated. Those granted exemptions total around 3% of the workforce. Exempted employees in customer-facing positions have been placed on temporary unpaid leave.
Despite the onset of omicron, Kirby remains upbeat about United’s forecast over the next year. Debt servicing and the resumption of new routes may be temporarily delayed, but per Kirby, the future is bright. At the time, employees will not be required to get a COVID-19 booster shot.
image: Scott Kirby / Instagram (in front of the White House, not U.S. Capitol…he was busy in DC)