Air travel demand is unlikely to surpass half of its normal levels as long as the Covid-19 crisis persists, United Airlines executives said during an earnings call on Wednesday.
United's second-quarter operating revenue was down 87.1 percent year over year to $1.5 billion, including a 93.5 percent decline in passenger revenue. Corporate traffic in June was down 96 percent year over year, EVP and chief commercial officer Andrew Nocella said.
While demand had begun to pick up in June, recent increases in Covid-19 cases across the United States derailed recovery, executives said. United recently lowered its planned schedule for August and still is finalizing its September schedule, and load factors, which were averaging 57 percent in June, likely will be below 50 percent in the coming weeks, Nocella said.
Although Nocella said demand recovery likely would start up again when Covid-19 cases begin to decline and quarantine restrictions are lifted, but it would be "jagged."
"We continue to believe a full recovery is contingent upon effective therapeutics and a vaccine," Nocella said. "Our best guess is demand, as measured by revenue, will recover over time to be down approximately 50 percent [year over year] and then plateau at that level until a vaccine is widely distributed."
The carrier is working with its unions to develop voluntary programs to mitigate looming furloughs after Oct. 1, United president Brett Hart said. United is about to close its previously announced voluntary separation and retirement programs, in which more than 6,000 employees have opted in so far, he said.
"Unfortunately, this crisis has lasted longer and become worse than most experts anticipated," Hart said. "So, these efforts, while meaningful and appreciated, simply are not enough and only get us a small step of the way there, leaving us to make some of the most difficult decisions in the history of United Airlines, specifically on the size of our workforce."
United reported a loss of $1.6 billion for the second quarter, compared with net income of $1.1 billion the second quarter of 2019.
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