United Airlines sees revenue stalling at 50pc without a virus vaccine

CHICAGO (AP) – United Airlines executives said on Wednesday that travel will rise when the number of new coronavirus cases drops but the airline’s revenue will stall around 50 per cent of pre-pandemic levels until there is a vaccine.

No doubt United would settle for half of normal sales right now. Its revenue plunged 89 per cent in the second quarter, pushing the Chicago company to a USD1.6 billion loss.

Air travel was slowly recovering until the number of confirmed coronavirus cases in the United States (US) surged, especially in the Sun Belt, starting around late June. New York, New Jersey and Connecticut now require visitors from 31 states to quarantine themselves for 14 days upon arrival, and other states have similar edicts.

About 530,000 people went through US airport security checkpoints on Tuesday, the lowest number in July other than the Independence Day holiday, and down 78 per cent from a year ago. United executives said the setback will be only temporary. “We do expect that demand recovery, which stalled in recent weeks, will begin to recover again when new cases start to fall, quarantines are lifted, and borders are re-opened,” Andrew Nocella, the airline’s Chief Commercial Officer, said on Wednesday on a call with analysts and reporters.

Nocella said United’s revenue will rise to 50 per cent of normal “over time” and stay there until there is a vaccine for COVID-19, the disease produced by the coronavirus.

United and other airlines are trying to persuade consumers that air travel is safe. CEO Scott Kirby said that filtration systems and air-flow patterns inside planes make them safer than restaurants, office buildings, “or even a hospital”.

“It really is one of the safest places you can be if you are going to leave your house,” Kirby said.

Passengers have criticised United for booking planes full when it can. American does the same, while Delta, Southwest and JetBlue block some seats to create more space between passengers. United said it limits full flights by substituting larger planes – 4,000 times in May and June, it said.

United said its average flight from April through June was 35 per cent full and it estimates the July average will be 45 per cent.

The airline estimates it will lose USD25 million a day during the third quarter, down from USD40 million a day in the second quarter.

United last week warned 36,000 employees that they could be furloughed in October.