With much of its fleet grounded due to the COVID-19 pandemic, United Airlines is losing a staggering US$100 million in revenue each day. This week, the Chicago-based carrier’s leadership held a virtual town hall meeting with its employees via video chat. The call was made to provide an update on the financial situation of the company amid the outbreak.
According to Live And Let’s Fly, United CEO Oscar Munoz and President Scott Kirby shared that even though the Coronavirus Aid, Relief, and Economic Security Act (CARES) will help the airline with its payroll through the end of September, advanced booking numbers are so low that it is losing more money than initially anticipated.
Over the last few weeks, the operator has been cautious about being too optimistic about returning to its usual business. However, as virus cases in the United States continue to grow, the firm’s executives warned against complacency.
“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,” Kirby said, as reported by Live And Let’s Fly.
Decisions to be made
If this V-shaped recovery does not occur, jobs will be up for review. United will have to adjust its cost structure to be consistent with the $1.3 billion decline in revenue.
Kirby added that voluntary leave is key to helping United cope. He said that if staff all worked fewer hours, the airline could bounce back quickly. Nonetheless, he does understand that there won’t be many employees jumping at this prospect due to fixed expenses.
Ultimately, somehow reducing its cost structure to match the reduction in revenue will be important. Once October hits, the airline’s goal will be to get its cash burn down to zero for as long as possible.
In it together
Meanwhile, the firm has recently partnered with New York City authorities to do some good. The partnership will see the airline fly medical volunteers to help in the fight against the outbreak. The program will provide free return flights for doctors, nurses, and other health professionals who want to help treat affected patients in the Big Apple.
Airlines have been massively rocked by the outbreak. However, it is great to see several of them recognizing their responsibility as a global business.
United had an incredible year in 2019 with multiple expansions across the globe. It also had high hopes for this year but just like most businesses, it has had to put many of its plans on hold. The carrier will be eager for 2021 to come around so it can soar high once again.
What are your thoughts on the amount of revenue United is missing each day due to the pandemic? How have you been impacted by the cuts? Let us know what you think of the situation in the comment section.