United Airlines Says Its Well-Placed For Post COVID-19 Pandemic Growth
United Airlines has said that it expects to be a big winner of post COVID-19 pandemic international travel as other airlines retire large planes or retreat from long-haul markets.
Chicago-based United was the largest US operator of international flights before the pandemic that has thwarted global travel and led many countries to restrict entry.
It is among US airlines that are actively lobbying the new US administration to reopen borders for people who test negative for COVID-19 before travel or who have been vaccinated.
US President Joe Biden has indicated that he plans to maintain a ban on most travellers from Europe and Brazil and require a quarantine for all international air passengers upon US arrival, but moved swiftly on Thursday January 21 to address the COVID-19 pandemic with steps to expand testing and vaccinations and increase mask-wearing.
Those measures are considered to be key to fighting the pandemic and restoring confidence in air travel.
When wider international travel does return, airlines and passengers will face a changed market, likely with fewer flight options.
"There are simply fewer widebody aircraft in the fleets around the world. There's, in particular, fewer of the very large ones with the very large business-class cabins," United Airlines chief commercial officer Andrew Nocella told analysts on a conference call.
That will benefit United, which has been revamping its business-class product and kept its fleet largely intact.
Long-haul widebody jets like the Boeing 747 and Airbus A380 are among those that airlines in Europe and elsewhere are trimming from their fleets.
And this month, Norwegian Air said that it will end its transatlantic flights that less than a decade ago challenged long-established rivals and seek government help.
US airlines have received $40 billion in federal payroll aid, with much of that being in the form of grants that do not have to be repaid, under two separate COVID-19 relief packages, and a separate $25 billion in low-interest government loans.
In the last travel cycle, profit margins for US domestic travel outperformed international margins. But post-COVID-19, United said that it expects international travel to generate more profit as demand outstrips supply.
For now, US travel demand has stalled at approximately 30% to 40% of 2019 levels, and airlines say that it will not increase significantly until vaccines are widely distributed.
But once demand snaps back, United chief executive Scott Kirby said that it could quickly climb to 85% or 90% of 2019 levels, which was a record year for US airlines.
United posted a deep quarterly loss last week due to the pandemic but said that it expects its profit margins in 2023 to exceed 2019 level thanks to a cost-cutting drive.