Speaking to employees in a town hall-style meeting, United’s two leaders presented sobering numbers and warned that recovery may be much slower than originally hoped for.
Incoming CEO Scott Kirby and Outgoing CEO Oscar Munoz virtually sat down with employees in a “town hall” video cast. Both presented updates and also took questions from employees.
During this critical period, United is losing $100MN in revenue per day. Even with payroll expenses soon to be met through the end of September by the CARES Act, advance bookings are so depressed that United is burning through cash.
In explaining why United continues to warn about shedding jobs in October, Kirby warned that hopes of a steep recovery are unlikely at this point:
“While we all think that the Coronavirus will be behind us and recovery is going to be somewhere on the horizon, we can’t be too aggressive about assuming it’s right around the corner and expecting the so-called V-shaped recovery because if it doesn’t happen we put ourselves in even more risk and even more danger.”
Absent that V-shaped recovery, United will likely slash jobs:
“If that’s the case, we are going to have to figure out how to adjust our cost structure to be consistent with the $1.3 billion decline in revenue. But it’s possible we could be back to normal, or down 10 percent.”
That unknown is key, because United does not want to cut too little that it cannot support itself on the other side of the bailout. Nor does it was to cut too much such that if the recovery is stronger than planned United is not in a position to take advantage of it.
Alternatively, Kirby pushed the idea of more voluntary leaves as a key:
“If we were all just working fewer hours, man, we could snap back quickly.”
The problem with that, of course, is that try asking anyone with fixed expenses to suddenly dramatically cut income…good luck.
Either way, United need to cut costs. Kirby added:
“We will need to reduce our cost structure one way or another to match the reduction in revenue. The goal once we get down to October will be to get our cash burn down to zero for as long as possible.”
Read between the lines. Reducing “cost structure” may well be about far more than lowering labor costs…
CONCLUSION
The numbers are staggering and based upon all I am reading and hearing, United’s Q4 revenue projections seems a bit rosy at this point.
Rather than one omnibus article, I’ll unpack parts of the town hall meting I found interesting in smaller doses. United is also ready to retire several aircraft, including some that are fresh out of the shop. Stay tuned.
Wow that’s a hell of a lot of cash. There’s no way you can lose that amount of money daily and think your going to be able to hire everyone back accordingly.
I’m sure you saw the 6.6m (5.8m adjusted) unemployment numbers. That puts us around 10m and claims still rising. Personally I think it’s outright stupid to think welll just “bounce back” especially when people in all sectors of the market are beginning to say “well this is going to take longer than we thought”
My dad is an upper middle class white guy ( I’m Indian and adopted) who made some good trades about a month ago and pulled out enough money to pay his bills the next couple years but with unemployment posssssssibly touching as high as 30% or more by some predictions I’m starting to think and worry about the increasing crime rate but my pops is playing it off and staying blind fully optimistic.
These numbers continue to prove to me thousands and thousand of jobs will not be coming back across the travel industry and ultimately every interconnected job around the travel industry.
I read in a study that some scientists had predicted for every percent increase in unemployment there’s is a correlated 1-2% in crime. You do the math.
With the straight stupidity and lack of acting by our government it’s clear people won’t get stimulus checks for weeks and unemployment for possibly just as long. Everywhere also just got ordered to stay in another month,
Idk man all in all this is lookin bleak and I hate to me that person but If I’m anyone I’m the realistic truth teller and all the facts are right in front of us.
Travel isn’t coming back for a while and since business travel supports the industry so much I wonder how much it’ll ever be the same as people move toward teleconferencing.
It’s a weekly measure of unemployment – you don’t add the 3.3MM last week to the 6.6MM this week AFAIK…
Unfortunately to do add those numbers. Each of those weeks represents new UI claims to the system. so 10 million in the last 2 weeks. And that’s BEFORE the Independent Contractors really start applying for the new CARES UI they are eligible for.
UA-nyc …. do you know what reading is? You should try it sometime. There’s a bunch articles that explicitly state this. So now you look just as stupid as your comment.
Mea culpa – there’s a nice way to call out a mistake (as the poster above you did) and a sh!thead way, as you did.
Piss off twat and go live off your daddy’s teat.
You had all the time in the world to look it up before commenting but you thought your “AFAI” was good enough Lol
I said my dad pulled out money, I didn’t say I’m living off him bitch. Again you should read into details lol. I pay all my bills with money I earn and It didn’t take my wealthy father to figure out how to do research.
Why even put AFAIK ever when your literally typing on the internet. You don’t have to AFAIK anything unless your to dumb to look anything up. As shown above.
Oh and calling me a twat but not proving me wrong does whattttttt lol oh proves your still wrong and got your feelings hurt awwww poor wittle baby. Do you need someone to read to you since you don’t know how to read your self
How bout use common sense, be logical, do some research and you’ll never have to look stupid on the internet.
I’m 30 you must be old cause fuck an AFAIK everything is out there for you to find out look it up dumbfkc before trying to point out (while being wrong) my statement.
wait wait i’ll use your logic..
As Far As I Know…
‘UA-NYC’ means Ultimate Anal – Needling Your Children
I mean i didnt do any research or anything but im pretty sureeeee hahaha
I wonder if they will reverse any of the negative impacts to their frequent flyer program. I had already bailed on UA when was announced (from 1k). Fixing the requirements for status might help bring some spend.
Anyone thinking that markets, travel, and well, anything, will come roaring back soon is truly living in denial. The only way that happens is a true miracle from science in the coming weeks in developing a therapy drug that has outrageously good results.
The more realistic timeline, certainly for airlines, is that we are in this until next year with only those who built immunity having the ability to travel safely. If they develop a home antibody test we might find that 30% of the population is cleared for normal activities by fall. This as we are just seeing now that a significant percentage of the population actually may have had the virus and never knew. How much loading you received of the virus may be directly related to the level of sickness you feel. A low load and no symptoms still provides you the antibodies to be immune for a period. This is the first key to recovery across the world.
Next will be a vaccine. Probably spring of next year. Only then will you see another wave of people able to return to normal life again. But the economy will be so devastated at that point that it will take years to recover to the levels we saw pre-Covid19. Recovery will make the 2008 financial crisis look like a cakewalk, especially for the travel industry.
United is crazy in thinking that Q4 is the magic time that everything comes storming back. Unless there is a miracle drug developed. I imagine for years to come airlines will be half the size they once were. And that most will be forced to reorganize under bankruptcy or continue to receive subsidies.
I’ll have to clean up these comments. Please, no more personal attack or all will be deleted.
Thank you. Lucky’s comments have become a cesspool over the past year, mostly due to the hands off policy their team employs.