Several airline heads have downplayed the impact of the COVID-19 outbreak in the last few weeks. However, at today's J.P. Morgan 2020 Industrials Conference, United chairman Scott Kirby shared that he is preparing his company to be ready for substantial cuts.

United Airlines at Denver
United admits that it had been a tough period for the business. Photo: Getty Images

Huge impact

View From The Wing reports that the soon-to-be United CEO said that his firm is planning for the impact to be "relatively short but deep”. Additionally, it will have “a large near-term impact on revenue.”

The company is planning for revenue to drop down 70 percent next month. This figure could repeat in May before dropping 60 percent in June. Revenue could then be down 40 percent both July and August.

Thereafter, the airline is planning for a 30 percent drop in both September and October before dropping 20 percent in November and December. Altogether, Kirby says that this is not a forecast but a dire scenario that his firm is preparing for.

United Airlines Fleet
The move will raise short-term cash for the airline. Photo: Getty Images

A drop in numbers

Domestic demand is dropping in a similar fashion to what airlines are seeing in operations to Asia. Currently, the Chicago-based carrier has reduced 10 percent of its domestic and 20 percent of its international services for April. However, as the outbreak continues to spread, the firm is planning to also cut May's flights by 20 percent.

Thereafter, there could be further cuts each month after that, which will be as considerable or even more prominent than previous revisions. This trend could continue until United sees proper evidence of a return in demand.

According to his keynote, net bookings (new bookings minus cancellations) to Asia and Europe are down 100 percent. Meanwhile gross bookings (new purchases only) in the Pacific are down 70 percent. Additionally, gross bookings to Europe are down 50 percent. Finally, domestic net bookings are down 70 percent and gross bookings are down 25 percent.

Coronavirus, United States, Arrival Airports
Chinese airlines have been the worst affected by the virus. Photo: Getty Images

Plan in place

To prepare for even further drops in demand, the airline is putting extra measures in place. It is starting reductions in capacity, capital expenses, and operating expenses. Along with this, it is raising liquidity, in fact, it recently secured $2 billion with its aged aircraft. The airline has also stopped stock buybacks from February 24th.

Furthermore, United now projects its capital expenses for the year at $4.5 billion. This is a drop from $7 billion. It will also not take on any new planes that aren't fully financed.

Kirby is no stranger to taking on a challenge when it comes to sensitive economic climates. He oversaw US Airways during the global recession so he has the experience to prepare United for the worst.

Also, the businessman will give up his base salary through June 30th. Current CEO Oscar Munoz will also join his colleague with this gesture in a bid to minimize the impact that the coronavirus outbreak is causing.

Simple Flying reached out to United for comment on its plans during the coronavirus outbreak. We will update the article with any further announcements.

What are your thoughts on airlines continuing to cut flights amid the outbreak? Are you one of the passengers impacted by these cancellations? Let us know what you think in the comment section.