United execs warn COVID-19 demand hit could extend to 2021

March 30, 2020
Image: Twitter/United.

Executives at United Airlines have warned travel demand may remain depressed into 2021, resulting in a smaller airline and workforce.

The warning is contained in a letter to United staff from chief executive Oscar Munoz and president Scott Kirby that promised the airline would not conduct involuntary furloughs in the US before September 30.

Continuing to employ staff is one of the conditions in a $US50 billion government assistance package signed into law by US President Donald Trump and all three major US carriers are planning to continue services.

READ: US airlines must fly to all ports to access aid payments.

Governments have been forced to step in as airlines around the world have slashed flights, parked planes and laid off thousands of employees as they attempt to preserve cash and hunker down to get through the crisis.

Congratulating staff for their role in obtaining assistance and their performance during the crisis, Munoz and Kirby noted that the impact of COVID-19 was far worse than the aftermath of the September 11, 2001, terrorist attacks.

They noted it would give United time to adapt to the new environment and assess how long it would take for the US economy to recover.

“The global economy has taken a big hit, and we don’t expect travel demand to snap back for some time,’’ they said.

“Our April schedule is already cut by more than 60 percent and we expect our load factors to fall into the teens or single digits even with 60 percent less capacity,’’ they said.

“We are currently planning to make even deeper cuts in May and June.

“And, based on how doctors expect the virus to spread and how economists expect the global economy to react, we expect demand to remain suppressed for months after that, possibly into next year.

“We will continue to plan for the worst and hope for a faster recovery but no matter what happens, taking care of each of our people will remain our number one priority.

“That means being honest, fair and upfront with you: if the recovery is as slow as we fear, it means our airline and our workforce will have to be smaller than it is today.”

Delta Air Lines chief Ed Bastian also warned staff of the challenge ahead.

“While this assistance is welcome, it’s important to remember that the relief package is not a cure for the unprecedented challenges we face,” he said.