United Airlines CEO warns economic woes will get worse without vaccine, new round of stimulus

Sep 14, 2020

Business
United Airlines CEO warns economic woes will get worse without vaccine, new round of stimulus

Washington DC (USA) Sep 14: As the deadline looms for layoffs to begin across the airline industry, Congress remains at a stalemate over a new round of coronavirus stimulus.
United CEO Scott Kirby said Sunday that while some industries of the economy have been able to recover, "anything to do with leisure, hospitality, meeting, convention services [and] restaurants are all hurting, and frankly, are near depression levels."
"It was a remarkable bipartisan response really to rescue not just the aviation industry, but the whole economy back in March, an unprecedented bipartisan response," Kirby said in an interview on CBS' "Face the Nation." "But this is lasting longer and is deeper than most people thought back then. And our revenue, we just said, is going to be down 85% in the third quarter. And in a world like that, United Airlines and others come Oct. 1, without an extension of the CARES Act ... is going to be forced to lay off employees just to survive."
He explained that business travel is "almost nonexistent" while leisure travel is "down significantly from where it was before." As for international travel, United's revenue was down 96% year-over-year for the second quarter and continues to take a hit as coronavirus restrictions keep borders closed.
Kirby said that demand for air travel shows no sign of rebounding anytime soon without people feeling safe around each other.
"That's going to take a vaccine, and that's just the reality," Kirby said. "Some businesses can recover earlier, but in aviation and all the industries that we support, it's going to take longer."
While the airline has gone to the private market for roughly $18 billion in capital to get through the pandemic, Kirby said it isn't a sustainable long-term strategy as millions of dollars are burned each day.
"In a world where we're still burning $25 million per day, you just can't go forever on that," Kirby said. "And our view is demand is not coming back. People are not going to get back and travel like they did before until there's a vaccine that's been widely distributed and available to a large portion of the population. And I hope that happens sooner, but our guess is that's the end of next year. And so you just got to survive those losses through that time and be ready to bounce back."
Until then, United plans to lay off 16,000 employees once the original $25 billion bailout for the airline industry expires on Oct. 1. While at least 3,000 of those jobs will be saved due to an agreement reached with the pilot union last week, thousands will still have to be let go just for United to stay afloat.
"We have confidence in the long-term future of being able to bring everyone back," Kirby said. "But getting through a crisis where revenue is down 85% is just not sustainable for an industry like aviation or almost any business for that matter."
As businesses continue to be pushed to their limits financially to weather the pandemic, Kirby expects that the layoffs across his industry are only the beginning.
"The reality is, without more government support for the whole economy, there's going to be more layoffs to come across the economy."
Source: Fox News