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Home  >  United Airlines  >  United Airlines Enters Survival Mode
United Airlines

United Airlines Enters Survival Mode

Matthew Klint Posted onMarch 11, 2020March 11, 2020 26 Comments

Hope for the best, prepare for the worst is a catchphrase United is aggressively embracing in light of continued uncertainty over domestic and international travel.

In a startling keynote address at the J.P. Morgan 2020 Industrials Conference yesterday, incoming United CEO Scott Kirby was blunt and to the point: bookings are way down and United is acting swiftly to counterbalance the sudden and steep drop in demand.

Revenue will take a huge hit as United plans for a “relatively short but deep” coronavirus. United is planning (not projecting) a 70% decline in revenue in April and May, 60% in June, 40% in July and August, 30% in September and October, and 20% in November and December. This, Kirby makes clear, is worst-case scenarios.

United will continue to cut flights each month until its sees “concrete signs of returning demand”.

Why the drastic actions? Kirby, the ultimate number cruncher, talked numbers:

  • Net bookings to Asia and Europe are down 100% over the same period last year
    • Net bookings are new bookings minus cancellations
  • Gross bookings to Asia are down 70%
    • Gross booking = new bookings only
  • Gross bookings to Europe are down 50%
  • The domestic market is better, but still alarming:
    • Net bookings are down 70%
    • Gross bookings are down 25%
    • United expects the domestic market to continue to dip in the weeks ahead

So what is United doing to keep the ship afloat?

  • Raise more liquidity – United just raised another $2 billion
  • Reducing 2020 capital expenditures by 35% – from $7 billion to $4.5 billion
    • Capital expenses “won’t come back for 2-4 years”
  • Paused stock buybacks
  • Defer aircraft deliveries (unless fully financed)

You can listen to the full presentation here.

CONCLUSION

The humbling thing for Kirby and United is that despite careful planning, this matter is really beyond his control. Experts broadly predict things will get worse before they get better. The question is how much worse…and is there a will and a way to tackle the issue head-on? United’s new “survival mode” is hardly surprising considering the numbers. What is even more surprising is the numbers themselves and the fact they could get even worse.

image: United

Previous Article Emirates Emphasizes Cleanliness Over Glitziness
Next Article United’s Doomsday Strategy May Lead To Kirby Kutbacks…

About Author

Matthew Klint

Matthew is an avid traveler who calls Los Angeles home. Each year he travels more than 200,000 miles by air and has visited more than 135 countries. Working both in the aviation industry and as a travel consultant, Matthew has been featured in major media outlets around the world and uses his Live and Let's Fly blog to share the latest news in the airline industry, commentary on frequent flyer programs, and detailed reports of his worldwide travel.

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26 Comments

  1. debit Reply
    March 11, 2020 at 10:56 am

    These airlines were minting money for 10 years and handing out bonuses. Most companies were issuing bonds to buy back their stock. That’s like going in debt to buy bigger property.

    Now they will ask for bailout. In effect asking for your help to pay for the property they couldn’t afford to buy in the first place. This is just plain larceny. This is how Republicans operate. They might use words like stimulus, QE, liquidity crisis etc. But they are just plain old thieves and deserve to be beaten up like plain old thieves.

    Trump is a master of this scheme. Buy on debt and declare bankruptcy. Do not fall for this.

    No bailout for capitalists and thieves that pretend to be capitalists. A bailout is stealing.

    • UA-NYC Reply
      March 11, 2020 at 1:06 pm

      Preach it Brother Debit!

      At least 46, President Biden, will sweep into office to deal with the #TrumpCleanup. Back to normalcy after that thankfully.

      • Donald Reply
        March 11, 2020 at 6:40 pm

        Doing everything they can except lowering prices or frequent flyer points needed for new travel. It’s still 54K miles for a one way, 3 1/2 hour business class flight from LAX to ORD, nearly $500 each way. (unless I want to leave at 1:20am). The flights that are left after cancelations are running fairly full. The billions they all collected in ridiculous fees the last few years should tide them over without the taxpayers help.

        And boo, hoo…suspending stock buybacks.

      • Richard Reply
        March 12, 2020 at 4:49 pm

        Excuse me…but the King of stimulus is none other than Barack Hussein Obama…you have such short memories. US auto industry bailout and stimulus…WallStreet bailout. That and not to mention Barney Frank and Christopher Dodd and their home mortgage stimulus. Get your facts correct if you want to accuse

        • Mark W Reply
          March 13, 2020 at 5:09 am

          You are partially correct, during the recession of 2008, he did step in to keep the American union and white collar folks with two of the three afloat. However, Donald with the aid of what was the Republican led Congress and Senate has spent more American tax dollars trying to sustain the DoD, farmers etc. Look at the deficit nowadays. It is not sustainable regardless of who sits in the Oval Office. If the virus shuts down the economy, American industries will all need a level of stimulus to stay afloat. 9/11 is but a blimp of a “Blackswan” event. This coronavirus represents a major Blackswan event that is still unfolding. As a life long Republican and Vet, we need leadership back in the White House. America needs a functional Adult

        • Ray Sharradh Reply
          March 19, 2020 at 9:42 am

          Amen, Richard. Remember “Cash for Clunkers”? Freaking brilliant. Got gas guzzling hoopties off the road and stimulated new and used-but-newer car sales. Good for the economy, and good for the environment.

      • Maude Reply
        March 13, 2020 at 1:04 am

        Why are the idiots at United having Mandatory Training for flight attendants this weekend in NYC ?? 3/14 – 3/15/2020

        Seems ill-advised, at best

    • emercycrite Reply
      March 11, 2020 at 8:42 pm

      Couldn’t agree more.

  2. William Reply
    March 11, 2020 at 11:09 am

    Matt, I care about you and your family. please take a little time and watch the first 15 minutes of this interview with a world class epidemiologist that happened in the last two days. It’s about to get much worse for travel and the economy as a whole.

  3. Paul S Reply
    March 11, 2020 at 11:35 am

    ‘…beyond his control.’ Precisely, and this goes for all corporates caught up in this contagion calamity. Korea Air’s CEO made a blunt address to his employees, i.e. the company may not survive. Korea Air! I saw March 10 United Kingdom’s Channel 4 TV news interview with the doctor coordinating the COVID19 response in Lombardy, Italy. This man was articulate and laid out what they are facing there. It was frightening. It was not hysterical, just factual of what the Italian health care providers are dealing with. Today, March 11, Dr. Anthony Fauci in America said the worst is yet to come, the virus is 10 times for lethal than the flu. Look at the new number of cases exploding in Switzerland this morning, March 11. Switzerland. Not a third world country. America dithered and did not put up the necessary barriers or implement an emergency plan sooner. Ditto U.K., Germany. Be prepared for the most monumental upheaval for many decades and the ensuing economic impact. Good luck to all. Self isolate if you can.

    • UnitedEF Reply
      March 11, 2020 at 12:11 pm

      What are you talking about? The us banned arrivals from China and were criticized for jumping the gun now it’s they didn’t do enough. 10x more deadlier than flu is way better than the 23x they were talking about in the beginning. As more testing is done that number will continue to drop. There are hundreds of thousands of people who are infected with symptoms so mild they never got tested or went to the hospital according to epidemiologists who modeled for exponential growth of this virus. The actual numbers will never be known and China was so bad at testing the CFR is likely much lower. The Italians had a super spreader Pakistani immigrant who tested positive was told to self quarantine for 14 days. He continued his job AMA as a Chinese food delivery person and spread it to countless people before the police caught up to him. The Iranians are licking the shrines in a show of solidarity with the regime and their cases exploded. Then there was the MO wan who returned from Italy was told to self quarantine but proceeds to the father daughter dance that weekend. The government can only do so much if the people just ignore instructions. The only way to contain this virus is a hard quarantine enforced by police. Otherwise we will just have to let it burn thru the population. Containment was lost months ago so stop with the blame game and do your part to help slow the spread of this virus.

      • Steve K Reply
        March 11, 2020 at 1:55 pm

        WHO just declared COVID19 a pandemic – pan. Italy just reported 196 new deaths, more than 2,000 new cases – a record for a 24 hour period. Things are moving so fast. Be prepared. Self isolate if possible. America, Canada should have banned inbound flights from China, Korea, and other countries long ago, sealed all of our borders tight. Horses are out of the barn. Our southern border is wide open as all manner of illegal migrants cross, including from mainland China, Pakistan, Afghanistan. All flooding over the Mexico-U.S. border. The Washington State Governor just declared a ban on gatherings of more than 250 people in King, Snohomish and Pierce counties (big cities respectively: Seattle, Everett and Tacoma). Things are looking very grim for Boeing as today’s stock fall has pushed the price under $200 – a fall now of 60 percent from its 13 month high. Reuters just reported sources saying Boeing will freeze hiring, cut back work on 737Max, etc. Stay tuned.

        • debit Reply
          March 11, 2020 at 2:03 pm

          All fear mongering. This GOP virus is nothing more than a common a flu. Trump said so.

          I encourage everyone that thinks they have the GOP virus to attend MAGA rallies and show all the love they can to our republican brothers. Hug them tight and long.

          Nothing worse than a common flu. And no one has died from flu yet. since trump told us that too.

      • cargocult Reply
        March 11, 2020 at 8:09 pm

        The Associated Press says the story about the Pakistani patient zero in Italy is false:

        https://apnews.com/afs:Content:8622170027

      • Ravioliollie Kaye Reply
        March 12, 2020 at 10:01 am

        1. Your bias is showing.
        2. The annual flu currently making the rounds is killing upwards of 20 millions thus far.

  4. stogieguy7 Reply
    March 11, 2020 at 12:14 pm

    “Net bookings to Asia and Europe are down 100% over the same period last year…”

    OK, I’ve seen this is a couple of blogs but I have to ask: How can bookings to Asia and Europe be down 100% year to year? Does this mean that United hasn’t sold one ticket to either continent? Because that is what is being said. And, Matthew, it’s not you because this has been quoted elsewhere. If I have 100 coins and increase that by 100%, I now have 200 coins. Conversely, if I have 100 coins and lose them all, I’ve decreased my number of coins by 100%. The 70% figure is, on the other hand, plausible.

    Someone is bad at math and nobody (that I’ve seen) has questioned it yet.

    • Not Lucky Reply
      March 11, 2020 at 12:47 pm

      That’s exactly what it’s saying. NET ZERO bookings. Meaning any new bookings have been offset by cancellations. That’s how bad it is.

      • Matthew Reply
        March 11, 2020 at 7:45 pm

        Not Lucky is correct. It is shocking.

  5. Santastico Reply
    March 11, 2020 at 12:26 pm

    United deserves this and I won’t be surprise if they file for bankruptcy or are extinguished. Their leadership tea, is useless and all they do is to copy whatever Delta does. They are not leaders but followers. Nobody wants to fly United unless you live in their hubs. They have been damaging their brand for years and treating customer like s..t so now they are left in limbo. Well deserved. BTW, flew 4 different flights with Delta in the last two days. Every one was filled to capacity, all Delta employees smiling and treating customers like they deserve. I even got a hand written card from the main FA thanking me for my loyalty and telling me my connecting gate. Since I was sleeping during lunch she came and asked if she could pack me some snacks for em to take on the go as she was concerned I hadn’t eaten anything. What a service!!!!

  6. Beavis Reply
    March 11, 2020 at 1:08 pm

    I feel no sympathy for any airline’s financial demise, apart from the front line/hourly employees. Airlines have been soaking the consumer for years. What goes around comes around? Is that the phrase I am looking for?

  7. Mr G Reply
    March 11, 2020 at 7:39 pm

    The virus is all a plan from the New World Order to take over.

    Six weeks before the virus broke out a pandemic simulation called Event 201 was run in New York using a “coronavirus”

    http://www.centerforhealthsecurity.org/event201/

    https://futurism.com/neoscope/recent-simulation-coronavirus-killed-65-million-people

    You’re not going to tell me this is a natural occurrence.

    https://youtu.be/mzHom70dhKE

    • Pookie Reply
      March 12, 2020 at 4:27 am

      Mr G I’m going to tell you that this is a natural occurrence.

    • Eric Reply
      March 12, 2020 at 11:01 am

      Mr G.. do some research on your conspiracy theories.

      A Coronavirus frequently occurring, causing typically mild cold like symptoms, however become severe when they are more novel. SARS and MERS were both caused by a Coronavirus… in fact Covid-19 is a SARS related disease.

      So I sure the hell hope large cities were running simulations around Coronavirus before this.

  8. Christian Rogner Reply
    March 12, 2020 at 12:49 pm

    Matthew – this is directed at you only as the person able to moderate the posts – can we either leave the political crap off or is the comment section turning into a tit for a tat off topic stupid mudslinging over political views? This blog is better than that…

  9. Billy Reply
    March 12, 2020 at 1:56 pm

    We airline employees need our jobs too. We have families. We have goals. We have bills. Airlines run a tight profit margin. One of the tightest in business. Just an uptick in fuel prices can eat away any profit. Throughout the years we have been furloughed, laid off, taken paycuts due to rescissions or 911 type events, and we get blamed for any media outcry or mistake made. Now people here are hoping we lose our jobs. Well… as for me I hope no one loses their job or livelihood in this crises. Whether you agree or disagree with CEOs the vast majority of airline grunts LOVE our jobs and try hard to make running an airline work. People have no idea what we go through to keep flights safe everyday. And let me tell you. Its HARD. So much can go wrong. But we still try for you. Yes, there are bad apples. But every job has them. However the great majority of us work hard all while being jet lagged, or working graveyard shifts at ops, or double shifts, or long trips or legs the flight crew has to go through while having difficulty sleeping from one hotel to another and constantly feeling like we cant even get a real sleep routine together. I know dispatchers that quit after 911 because they couldn’t handle that their planes were high jacked and crashed. A lot of us work away from our families even. Commuters as we call ourselves they fly in from somewhere else to work for the week while our spouses and kids are without us. So just try to understand. Airline life is hard. Hard on the body and mind. Just keep in mind we go through much more than people realize. And after this passes (if it passes) we will be back again trying to get you were you’d like to go and ontime as much as possible.

  10. DFWSteve Reply
    March 12, 2020 at 5:33 pm

    @Christian Rogner I couldn’t agree more. The real idiots are those who think every single issue – from the brand of toilet paper in the tea house to the price of pumpkins in Pennsylvania – hinges on politics. People, please get a life. [insert any politician] is not the cause of Coronavirus and it won’t be solved by politics.

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