United Airlines warned investors yesterday that it has observed both an uptick in cancellations and a decrease in new bookings, which it blames on a recent spike in COVID-19 cases. Even as United tries to downplay the bad news, it demonstrates that recovery will be slow and unpredictable.
United Airlines Sees Fewer New Bookings, Surge In Cancellations
Thanksgiving travel plans are up in the air after a new plea from the U.S. Centers for Disease Control (CDC): stay home. Sadly, we enter the holiday season with an alarming increase diagnosed infections, hospitalizations and deaths related to COVID-19 across the country. Even before the CDC warning, many states, including California and New York, have urged their residents to avoid Thanksgiving travel.
Unsurprisingly, many Americans are taking the CDC at its word. An 8K Update from United Airlines notes that United is seeing a surge in cancellations and a decrease in new bookings:
Item 7.01 Regulation Fair Disclosure
United Airlines, Inc. (“United”), a wholly-owned subsidiary of United Airlines Holdings, Inc. (“UAL” and, together with United, the “Company”),continues to see a significant impact in demand for air travel. In the last week, ending November 18, 2020, there has been a deceleration in system bookings and an uptick in cancellations as a result of the recent spike in COVID-19 cases. The Company does not currently expect the recovery from COVID-19 to follow a linear path and, as such, the Company’s actual flown capacity may differ materially from its currently scheduled capacity. The Company’s scheduled capacity for the fourth quarter of 2020 is now expected to decrease at least 55% year-over-year, as compared to the Company’s previous guidance of a decrease of approximately 55% year-over-year.
At this time, the Company continues to expect total revenue to be down by approximately 67% in the fourth quarter of 2020 as compared to the fourth quarter of 2019.
What United Is Telling Employees About This
In a memo to all staff review by Live and Let’s Fly, United Airlines confirmed that demand is dropping, but clarified that projected fourth quarter revenue and cash burn remains unchanged:
We have made clear throughout this pandemic that we do not expect the recovery from COVID-19 to follow a linear path. As noted in our 8-k this morning, capacity will be down at least 55% year-over-year in the fourth quarter, versus down approximately 55% which we stated back in October. Overall, travel demand is still at historic lows and we expect to see less than half of the number of customers this year compared to Thanksgiving last year. Despite all of that, our guidance on fourth quarter cash burn and total revenue remains unchanged at this time. We still expect the week of Thanksgiving to be the busiest travel week since March. We will continue to be nimble and flexible by making adjustments to our schedules as needed based on fluctuating demand trends.
United offered a trip of talking points to employees who receive questions on the 8K filling or more general questions about future schedule adjustments:
- Travel demand is still nowhere close to where it was last year. We do not expect our recovery path to follow a straight line
- We will continue to keep a close eye on demand over the coming days and remain flexible as we adjust our schedules
- Our guidance on fourth-quarter cash burn remains $15-$20 million a day
Airlines will not escape the bleak winter the entire nation faces. Expect a very busy travel week next week, but a quiet December leading up to Christmas. Discretionary trips are being placed on hold or cancelled all together. Even with numerous protocols in place to promote cleanliness onboard, many will heed government advice and postpone travel plans.
Matthew, do you think UA will eventually match the more customer-friendly ticket residual policies of DL and AA?
I do. I’m told an announcement is imminent. I just hope UA will start issuing future credit when the new fare is lower than the old fare…that is a very customer-unfriendly move on the part of UA.
Good stuff, appreciate the inside scoop…note to UA, more customer friendly policies = easier to make bookings in confidence
$15-20M a day…. staggering. And they’ve been burning at least that the last 7 months.
And that’s just a single airline.
Think of all the small businesses, all the layoffs.
Social media hysteria + politicians = destruction.
I agree. We needed better leadership.
We have asked United as of last week if they will refund our tickets, we were denied. We bought non refundable tickets back in January/Feb planning on traveling to Germany in May. Covid-19 Hit. The world shut down and can’t use our tickets. It doesn’t look any better in the near future. Will we ever get out money or will we lose our tickets??? What do you think we should do?
Cancelled 5 straight flights from Port of Spain to Houston rude insensitive customer service reason was market suspension so why even bother booking customers make so sense
United Airlines has (4) Headquarters (2) in Illinois and (2) in Texas. They have too many layers of Management, And, their Management is.mostly Continental Since, it is Continental United in name. So, for them to cry about Money. That is where their money is going.