United Airlines CEO: ‘We’ve turned the corner,’ but travel demand to remain weak for months more - CNBC
BY Leslie Josephs
- United posted a $1.8 billion net loss for the third quarter.
- United’s CEO expects travel demand to stay below normal levels until there’s a widely available vaccine.
- The company is focused on cutting costs to weather the crisis.
A United Airlines plane seen at the gate at Chicago OHare International airport (ORD)on October 5, 2020 in Chicago, Illinois. Daniel Slim | AFP | Getty Images
United Airlines’ CEO Scott Kirby on Thursday said he expects air travel demand to remain lower than normal until there’s a widely available coronavirus vaccine, but the worst appears to be over.
United shares were down about 4% in morning trading.
“We think we’ve turned the corner and can see it, Kirby told CNBC’s “Squawk Box.”
A recovery is still “a long way off,” Kirby said, adding that demand “is not going to get anywhere close to normal until there’s a widely available vaccine.” He estimates that will be at the end of 2021.
The pandemic spoiled what is normally the peak summer travel season for U.S. airlines. After the market closed on Wednesday, Chicago-based carrier reported it lost $1.8 billion in the third quarter. Delta Air Lines earlier this week reported a $5.4 billion net loss in the quarter.
Air travel has ticked higher in the last few months and Kirby noted recent improvements. But it is still just a fraction of normal levels. In the third quarter alone, the Transportation Security Administration screened 64 million people at U.S. airports down from 220 million a year ago, a 71% decline.
United and other carriers have spent the pandemic raising cash to weather the crisis and slashing costs, parking hundreds of planes and cutting routes. The carrier had $19.4 billion in liquidity at the end of September. It has reduced its cash burn to $25 million a day, including debt and severance payments, from an average of $40 million a day in the previous quarter.
Kirby said the carrier will become cash-flow positive “at some point next year.” Delta on Tuesday said it was pushing back its target to eliminate cash burn in early 2021, later than its previous target of the end of this year.
Chicago-based United began furloughing some 13,000 workers at the start of the month after the terms of a $25 billion federal payroll support package for airlines that prohibited job cuts expired.