77.2 F
Washington D.C.
Monday, October 25, 2021
Advertisement

United Expects Quick Revenue Recovery Pending Vaccination Success

Must Read


United Airlines executives are confident that demand recovery will be quick, but they are less confident when that recovery will start.

While Delta Air Lines last week projected that its breakeven point would come in the spring, United executives in an earnings call on Thursday did not put a timeline on when its cash burn rate—which was $23 million daily in the fourth quarter, not counting $10 million in daily costs toward paying principal debt and severance payments—would reach zero. CEO Scott Kirby said that would depend on an “inflection point” of a successful vaccination rollout.

“That inflection point will happen not only when there’s a critical mass of the country that’s been vaccinated but also when we affirm a scientific and medical conclusion that once you get the vaccine, you are not only immune from catching Covid, you are no longer a transmission vector from Covid,” Kirby said.

Once that happens, which EVP and chief commercial officer Andrew Nocella said could be in the summer or “possibly sooner if vaccine distribution improves,” executives expect a quick, S-shaped recovery. From there, they expect a “steady increase in demand” to between 85 percent and 90 percent of 2019 levels and within a “matter of months moving from being cash-negative to quite a bit cash-positive,” Kirby said.

That will include business travel demand, which, although slower to return than leisure demand, is set to recover based on United’s conversations with its corporate customers and travel management partners, Nocella said.

In the meantime, United projects its first-quarter operating revenue will be down between 65 percent and 70 percent of what it was in the first quarter of 2019, with capacity about half of what it was compared with that period. Fourth-quarter 2020 operating revenue was down 68.7 percent year over year to $3.4 billion.

Kirby also expressed excitement over the recent announcement that Marriott International sales executive Doreen Burse would join the carrier in March as SVP of worldwide sales. He said he would leverage her hotel experience to get the carrier to be less focused on price as the trigger to win customer share.

“I have asked her every single time she’s in a meeting with us, and people talk about price as the way for us to compete, to stand up and throw something at us and get us to change that approach and find ways to make our brand as valuable as it should be,” Kirby said. “Hotels do a remarkably good job of having brand value and having customers like them and be loyal for reasons other than price.”

United reported a net loss of $1.9 billion for the fourth quarter. For full-year 2020, the carrier’s net loss was $7.1 billion.

RELATED: United Q3 earnings

- Advertisement -spot_img

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -spot_img

Latest News

Grapevine Wins BTN Group 2021 Business Travel Innovator Award

The BTN Group on Oct. 22 held its 8th annual Innovate in person at Convene on Liberty St., in the...
- Advertisement -spot_img

More Articles Like This

- Advertisement -spot_img
Translate »