Of all airlines, United has by far had the most dire predictions for the arc of the COVID-19 pandemic. President Scott Kirby rightly set the tone early by sounding alarms when others thought it could still just be a quick economic dip. We now know that this is going to be the kind of downturn that some generations never see. If any airline comes out of this without filing for bankruptcy protection, it will be a victory. And the key to avoiding bankruptcy is to have a whole lot of cash.
To that end, United quickly became singularly-focused on preventing cash from leaving the company. This was a wise move, and United had a jump on other airlines in that regard. For this, the team at United deserves praise… to an extent. The quest to conserve cash is important, but it can’t be allowed to blind a management team from looking toward the future. What will happen when this crisis passes? In United’s case, that doesn’t seem to be a concern, and it could result in serious heartburn down the line.
Throughout this crisis, United has employed the “shoot now, ask questions later” strategy. Moving fast is important, but if you move too fast without considering the consequences, you could find yourself in big trouble. United has had to backtrack several times recently, so instead of keeping cash in the company, it’s just making customers and employees alike rather angry.
Angering Customers
You likely remember the schedule change policy debacle that United created for itself since it’s been in the news repeatedly for about two months now. As this crisis began to unfold, United realized that there would be a whole lot of flights canceled, and that meant a whole lot of money would be flowing out of its coffers and back to customers in the form of refunds.
The airline has some sharp minds that quickly realized that if United could alter its policies, it could find a way to keep a whole lot more cash in the company. So, instead of allowing refunds after a 2+ hour schedule change as the original policy allowed, United moved it dramatically to a 25 hour threshold. This meant anyone who would have been impacted by a schedule change of between 2 and 25 hours would now be stuck with a voucher for future travel.
The backlash was swift and relentless. United caved by bringing the policy back down to 6 hours, still well beyond the original allowance. But it threw in another devilish twist. The airline said that for international travel, where the big money lies, changes of over 6 hours were eligible for a refund but only once the ticket validity period expired one year from the original date of purchase. This would at least prevent outflow from happening all at once. The problem here is that this expressly violates Department of Transportation (DOT) rules which require prompt refunds for significant changes. United was forced to backtrack again and begin issuing refunds for changes more than 6 hours.
More recently, United has found another clever… and sneaky… way to deprive people of their money. It used to be that the airline would automatically refund ancillary seat purchases when a ticket was refunded. Now it has reportedly shut that off and only issues refunds when customers request them directly. This will, at the very least, delay refunds for seat purchases. But there will be some people who lose track of these credits, and United will get to keep them.
The moves United has made have made not only a weary public skeptical about the airline but about all airlines. The airlines need travelers to feel safe that they’ll be treated fairly. United is making that difficult.
Angering Employees
This isn’t just something that customers have experienced; it’s impacting employees as well. You’d think an airline that just received billions of dollars in government aid would be happy to have the cushion, but United is already assuming it won’t be enough. And you know what? United is right.
Through at least September 30, United is required to serve every metro area in the US that it served before this crisis. It also must keep everyone employed and not cut pay rates in order for it to be able to hold on to the money. That means it’s running a bigger airline than it should be running, and it’s losing more money than it could if not for that massive stimulus.
Taking the stimulus money was the right move, but it means we’re all moving toward an October 1 that could become known as the “airline industry massacre” if prospects haven’t improved. All airlines realize this, and unsurprisingly, United isn’t mincing words.
This snippet was in a letter from Chief Operating Officer Greg Hart,
…even with a federal government grant that covers a portion of our payroll expense through September 30, we anticipate spending billions of dollars more than we take in for the next several months, while continuing to employ 100% of our workforce. That’s not sustainable for any company.
No, it’s not, but while others nervously await the end of September and quietly put contingency plans in place, United has decided not to wait. In a separate letter to management and administrative (M&A) staff, United laid out its plans for them.
- They had to take 20 unpaid days leave between May 16 and September 30, effectively cutting down from a 5-day to 4-day work week.
- Vacation days cannot be rolled over into next year. The airline is requiring that employees take 50% of their paid vacation days between now and September 30.
- Employees are encouraged to participate in the “Voluntary Separation Program” which will include “robust” benefits like pass travel. If they don’t take it now, then employees will be informed in July if they will be laid off on October 1. To try to put even more pressure on people to jump ship, United is removing all severance for those who are laid off. Volunteer, you get taken care of. Don’t, and you get nothing.
As stated, United agreed not to lay anyone off or cut pay rates through September 30. Now it was proposing to cut total pay by forcing unpaid leave and pressuring employees to quit or risk losing everything later. This, needless to say, did not go over well.
Was this even legal? That is apparently up for debate, but it doesn’t matter. Backlash was swift and brutal. American CEO Doug Parker said this was not allowed, further stoking the fire for unknown reasons. There are several ways to interpet this comment.
- Doug and Scott continue their feud and are just taking it public for the moment
- United is crossing a line here and should be smacked publicly for it
- American isn’t doing enough to conserve its cash and is just trying to divert attention
Chances are that all of these things are happening, but let’s not stray too far from the point. After hugely negative responses, the airline once again backed down. It now says it will just ask for volunteers to reduce hours instead of making people take unpaid leave. If it can’t get enough, however, it’s holding this over people’s heads that it may need to come back to the well.
Update 5/11 @ 827a: I mistakenly noted that United backed down from forcing unpaid leave on management and admin staff. This is not correct. It backed down from cutting hours for some front line groups after a lawsuit was filed. The cuts for management and admin appear to still be required.
Selling the Future for the Present
What United is doing here is systematically alienating its customers and its employees through these aggressive measures. The goal of conserving cash is noble, but the airline is overstepping. In its rush to roll out changes, it continues to make mistakes and is forced to backtrack. Each time it does, the trust between the airline and both its customers and employees erodes further. And since United has to backtrack, it doesn’t get the cash benefits.
United may have enough cash on hand to avoid being the first to fall into bankruptcy, but that doesn’t mean it can escape it altogether. Regardless, once this is all over, then what? Will United’s customers and employees come back to trust the airline again? United and its employees have almost never had positive relations, but things had been on quite the upswing the last couple of years. The employees that had opened up to trust the airline again have now been reminded why they have been so reluctant to do so. Customers are also feeling wary after the dizzying number of unfriendly changes.
United needs to bolster its cash position without question and employees generally want to rally around their company to save it. Customers are willing to bend to help companies they love to an extent as well. United just isn’t making it easy for people to want to do that. Over the last several years, there has been so much talk about this being a different industry than it used to be, but moves like this make it seem like it’s still the same old business.
61 comments on “United’s Short-Sighted Efforts to Preserve Cash at All Costs”
Add to all this bad press the following article over the weekend and you’re left with folks like me who just absolutely will not book a United ticket ever again. I know that American and Delta and Southwest are different and I won’t punish the rest for United’s bad behavior.
https://sfist.com/2020/05/10/ucsf-scientist-documents-completely-full-united-flight-from-newark-to-san-francisco/
This was ridiculous – it was only a week or so ago that they were canvassing for opinions as to how to make flying less threatening at the moment, then tell us they’ll enforce social distancing on the plane – and then they ram a plane full of people, who’ve literally put their lives at risk to treat COVID patients in NYC. So many own goals.
Holy crap, what the hell was happening on that United flight & they tried to get publicity out of it? Yikes.
American is also guilty of not enforcing physical distancing.
https://www.businessinsider.com/american-airlines-full-flight-passengers-masks-coronavirus-2020-4
American and Southwest are also guilty of not enforcing social distancing.
https://www.businessinsider.com/american-airlines-full-flight-passengers-masks-coronavirus-2020-4
https://www.wtae.com/article/forest-hills-man-alarmed-by-full-flight-on-southwest-airlines-claims-no-social-distancing/32293522
So….. let’s see… the doctor was upset about the full flight?
If that doctor and the other 25 health care workers felt SO threatened they did NOT have to get on the flight.
They could have gotten off the flight and waited for a less full one.
He could have also rented a car and driven if he was SO terrified.
The doctor just wanted to get his 15 minutes of fame by slamming United.
I am sure that if he had been denied boarding because of the ‘social distancing” policy he would have been screaming about how United gave him a free ticket but could not get him home when he wanted and marooned him at the airport.
@Keith
1) United stated middle seats would be empty. So expectations were they would be empty.
2) United is an airline. Lying is in their DNA.
3) How are your shares of UAL doing?
What does leaving the middle seat empty REALLY accomplish? Social distancing is supposed to be 6ft. I can be sitting in 8A, but someone is still less than 3ft away in 8C. Not to mention the people seated in 7A and 9 A. Social distancing on planes isn’t realistic. Expecting the airlines to keep 8 seats open around every one sold isn’t realistic either.
Keith — Another thought — the airline (you know, the party with the most control over loads) could have taken steps to ensure the flight wasn’t so heavily loaded in advance?
If one goes Ch 11 aren’t the rest going to have to go too in order to stay competitive on the cost side?
abcdefg – I wouldn’t say all would have to follow, but it certainly would be difficult for the legacies if not. Just look at American’s lost decade when it refused to file.
Cranky, United is still forcing M&A to take unpaid leave.
Jeff (and others) – My apologies. I updated the post to reflect that M&A still has unpaid leave requirements, but the company backed off on IAM front line employees after a lawsuit was filed.
Don’t forget that Delia cut it’s employees hours first.
And the CARES act language was changed during the drafting phase. Hours were originally protected until the lobbying group got it changed.
I believe AS B6 and DL all cut hours – but before the bill was approved and also before the date when the CARES Act was put into law. UA cut hours after the Act was put into law.
DL told us in March hours would be cut starting April 1st and would continue through June. If you take one month voluntary leave then you would work your full schedule (40 hours/week) when you return.
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Once again United’s true colors come to the surface. Back in 2002 when United declared bankruptcy they pulled the same shenanigans on the customers. I ran away to their competitors and never looked back. If their customers stick with them after this then they deserve this treatment.
This is one person who will not forget United’s behavior after (if) this crisis passes. I will not fly United no way no how nowhere. I know people say this all the time, but I live in the LA area and have choices. Right now, I would take Spirit or Frontier over United.
UA is not the only airline cutting employee hours. DL and B6 are both doing it also. UA just got into trouble first because it has more unionized staff member.
AA is burning cash at 50% faster than UA. I don’t think we should blame UA for aggressively cutting cost and trying to save itself from the courts. The question should be why is AA so irresponsible right now and basically waiting for a miraculous demand recovery?
UA right now is doing the least sugar coating to its employees on how bad things will be come Oct 1. Frankly, I think a lot of its employees would rather they be honest about the cuts that are coming rather than fed lies fro the management (ala AA)
Even now, AA collectively seems to just be in denial about everything. I guess they’re banking on “hope” being a viable strategy?
@Kevin – Upthread, Mr. Snyder mentions AA’s “lost decade” (pre-bankruptcy). I guess AA is well on it’s way to another lost decade with the current management.
I thought the other carriers cut hours before CARES went into law? Timing is everything in that case.
Anyway, I don’t think anyone is faulting UA for being bearish. The issue is that they’ve hamfisted the execution, alienating customers and employees without even rendering the full savings when they end up backtracking.
Bingo! UA has pissed off everyone – customers, employees, and not following CARES or DOT. UA is all about them vs we’re all in this together.
“But the company really needs the cash” is not an acceptable excuse for violating customer trust and DOT regulations.
Lufthansa is playing the same game in Europe. Also not OK.
Excellent story.
Yikes, don’t post your phone number on a public comment!
Good advice, though he is a spokesman for ALPA.
United is still forcing M&A to take unpaid leave
The potential for mass airline layoffs a month before the presidential election is enough to make any politician shudder… Call me a cynic, but I suspect that our friends in Washington (from both parties) will make a lot of noise but eventually give the airlines another bailout, or find another “solution” that punts the problem down the road, until after the elections.
This. I can’t help but think that somehow the whole pseudo-economy will continue to be propped up at least until November. That’s when the shoe will really drop…
Completely agree with Dima. Then, all of the sudden, it will be austerity, austerity, austerity!!! I have no idea what event in November will trigger this change but have my best people looking into it.
Same here.
Kilroy,
I seriously have my doubts on that prospect as our government has taken a “let them eat cake” approach to what ever serves the public good.
“The quest to conserve cash is important, but it can’t be allowed to blind a management team from looking toward the future. What will happen when this crisis passes? In United’s case, that doesn’t seem to be a concern, and it could result in serious heartburn down the line.”
What do you expect when job one is to satisfy quarterly results for Wall Street & not think far ahead into the future unless forced to do so.
“What United is doing here is systematically alienating its customers and its employees through these aggressive measures. The goal of conserving cash is noble, but the airline is overstepping. In its rush to roll out changes, it continues to make mistakes and is forced to backtrack. Each time it does, the trust between the airline and both its customers and employees erodes further. And since United has to backtrack, it doesn’t get the cash benefits.”
I rest my case.
“United may have enough cash on hand to avoid being the first to fall into bankruptcy, but that doesn’t mean it can escape it altogether. Regardless, once this is all over, then what? Will United’s customers and employees come back to trust the airline again?”
They will file ch 11 as will most of corporate America. The bankruptcy courts will be used as a legal means to shed trillions of dollars in debt that had a snowballs chance in hell of ever being payed back. But unlike post 9/11 where the shock was short term, a viral outbreak such as Covid poses a whole other set of questions who’s answers will lead to who survives & who doesn’t.
Sean,
AA and UA, who are the two airlines most vulnerable to bankruptcy, have relatively small amounts of unsecured debt. Most of their debt is secured by aircraft which cannot generally be shed in court unless you part with the asset. Aircraft values will take a hit in the short term but newer aircraft will hold their value. UA just pulled a debt offering because it was backed by older aircraft which the market would not accept unless at higher interest rates.
If airlines are forced into chapter 11, it will be primarily to cut employee costs – esp. unionized employees UA’s attempt to impose changes on its unionized workers (or some of them) is a recognition of the need to cut everything possible that could be cut in bankruptcy.
The fact that they have published a massive displacement bid for their pilots – which is allowed in their contract apparently along w/ the cuts to ground staff hours – says that UA expects to be smaller and be willing to get costs out.
Even if the Fed money prohibits UA from cutting hours (or anyone else that did it after the CARES Act was passed) they will cut hours post Sept 30.
While many hope that the Feds will keep shoveling money to airlines, there will be some airlines that can raise money in private markets and also be able to cut costs; there is no reason to keep supporting the entire airline industry if some airlines can make it w/o federal help.
Thanks Tim.
I was trying to speak more broadly in that corporate America is in the process of unwinding the debts it took on over the past decade, not just the airline industry. Thanks for the airplane insights though, it was interesting.
This article is different from the schedule analysis type of article that has defined your covid 19 related posts but it highlights that ultimately opinion has to come into the picture.
– The long-standing rivalry between AA and UA is still present and will continue to define aviation.
– UA was indeed in a more difficult position than other carriers in part because of its much larger international presence including in Asia; international is great when the global economy works well but it is far more subject to the bottom falling out as has happened – again.
– UA’s domestic system is weaker than AA, DL or UA’s and UA’s mid-continent initiatives have been put on a long pause while the reasons for those initiatives are still there
– UA had more debt than anyone else except for AA and had a huge number of new aircraft due for delivery this year; even with financing its debt was set to grow.
– UA’s new aircraft are heavily international which means they will either have to retire a lot of older 777s or leave many parked in the desert for years
– UA’s cost gap with DL was a key reason why they could not close the margin gap; Kirby undoubtedly salivates at the potential to reset their cost structure, including with the pilots and domestic scope which was already an issue
– UA learned from its lesson post 9/11 that the Feds do not have to give government loans to every company which led to UA’s massive chapter 11 case. Even now AA claims it has the “right” to access billions more in government money; AA might well be the carrier that has to learn the hard lessons this time.
– UA has always been more willing than other carriers to sacrifice service and morals in order to achieve financial success – and service will fall as airlines recover.
– UA and the rest of the industry will benefit if AA or any large airline goes first into chapter 11.
– UA has to figure out how to stay out of serious trouble right now but the sheer nature of the industry means that UA will regain part of its share of the industry even if it runs rough shod over employees and customers now.
“ The moves United has made have made not only a weary public skeptical about the airline but about all airlines.”
Yup. And United is relying on the public blaming this on all airlines and not paying enough attention to know that United is by far the worst. They may well be right. The same strategy works in politics, where one party actively poisons the well and relies on the public to not pay enough attention to know that the vitriol in Washington is not truly bipartisan; one party is far more guilty. Exact same psychological behaviour by people who have better things to do than pay attention to which party/company is mostly responsible.
Sadly, this strategy generally works. Cranky, thanks for calling attention to United here.
The U.S. can assure that we have robust, viable,airline transportation without bailing out domestic carriers, How? let capitalism run its course, some US airlines willbe able to compete, others, like the big three, can ask their shareholders tobail them out instead of U.S. taxpayers. Maybe the airline herd should beculled at this point, if any of theUS mainline carriers fold, some investors or anothercompany will pick up thevaluable assets and operations from the bank, the planes willnot go away, the employees will still have jobs and the systems will remain ifthere is a market for it,new airlines with better business sense will arise and take up the slack inwhatever market there is, in a truecapitalistic society these large businesses would be allowed to fail. Theywould be replaced by newer and better business models. Passengers aren’t goingto be coming back for a long time. If the airlines can’t adjust to the changein environment, someone else will enter the field when the demand returns.Pan
One correction: the employees won’t still have jobs. They will be replaced by lower paid employees somewhere else in the race to the bottom of the pay scale. The original employees will leave the industry and go into lower paying jobs. Everyone thinks bankruptcy is an easy answer, except for the very real lives that are negatively impacted.
You’re completely missing the point — shrinking airlines means many, many fewer jobs and because airlines are, from a financial perspective, heavily dependent on cash flow, when that cash flow goes to almost next to nothing, things need to change, all industries are changing, the original employees enjoyed great pay and benefits for quite some time, now however, there are going to be a lot of companies clearing out a lot of deadwood and, unfortunately, a lot of good staff as well.
I was merely responding to your comment that “the employees will still have jobs” and your reply to my comment confirms that we are in agreement. I’d reiterate that bankruptcy is only easy for the attorneys and the bankers. Employees not so much.
Fair enough, point taken
I’m wondering what the impact the various cash preservation strategies had on the airlines’ first-quarter earnings reports. The amount of “cash burn” and “available liquidity” can be impacted by the different ways cash is managed (or manipulated if one is cynical). Delaying refunds is one way to inflate liquidity and minimize cash burn, at least on paper.
Kirby is just strategically placing the cart before the horse here. He will be able to claim up and down he tried to warn all stakeholders involved…right before the company files for its second chapter 11 bankruptcy. He will use this pandemic fallout as the excuse he needs to get the UA cost structure and pilot scope in line with what his ‘vision’ is for UA in the future, all else (service, morale, brand, etc.) be damned.
I know I have personally not given UA a dime in over a decade for past maleficence against me, and this just cements my stance.
Sometimes Dougie doesn’t know when to keep his mouth shut. He’ll definitely lose $$ in 2020 and maybe 2021. That was quicker than he thought (‘never’)! –Scott Moyer, Phila, PA
Best airline on planet is DELTA!!
Oh for god’s sake…take it airliners.net
yes money is going out and little coming in but United is saving money on, fuel, reduced staffing pay, unpaid leaves, inflight things like cokes, alcohol, food, snacks etc. landing fees,and other items but is management getting paid in full or are they taking a reduced pay, they did in the beginning but are they still on reduced pay or taking their whole checks….
MC – Yes, management has already slashed salaries. President and CEO are taking no salary at all.
I agree with your assessment.
I’ll had my own data: I had an essential trip from SF to LA last week.
UA should own this market and as an SF resident UA is my first choice simply because of their hub.
However, their shutdown schedule is crap: 2 E70 flights at weird times.
DL has maintained mainline A319 3 times a day.
On top of that, UA’s pricing was 50% even though seat map suggested flights were empty.
I went with DL. On top of your well-documented data above, they aren’t punishing or abandoning their customers like UA is.
I’ll remember this, even though the ability to use DL out of SF is very limited!
A lot of companies cut pay and hours, set mandatory time off and have asked for more voluntary time off to those still working, so that is not unheard of.
All the airlines know if things don’t drastically improve by October 1, staff reduction will occur, so it could be looked at as UA trying to let worker know if they don’t step up now, they could be let go later.
Not saying it’s right or wrong, but just something they are doing and another way to look at it.
So….. let’s see… the doctor was upset about the full flight?
If that doctor and the other 25 health care workers felt SO threatened they did NOT have to get on the flight.
They could have gotten off the flight and waited for a less full one.
He could have also rented a car and driven if he was SO terrified.
The doctor just wanted to get his 15 minutes of fame by slamming United.
I am sure that if he had been denied boarding because of the ‘social distancing” policy he would have been screaming about how United gave him a free ticket but could not get him home when he wanted and marooned him at the airport.
Coming in late but wanted to weigh in on your three suppositions on the Parker weigh in last week re United, Delta and JetBlue interpretations of CARES:
1.Doug and Scott continue their feud and are just taking it public for the moment (Response: There’s no feud in at least one of the individual’s involved. Going back in time, yet again, with direct feedback from American’s Board, which oversees and determines CEO succession, Doug asked Scott to exit American. Scott has never gotten over this event, and doesn’t have a lot of great things to say about his former employer as a result. Without Doug’s intervention, Scott would have left American with nothing. Instead, he was given an extremely large severance package and allowed to take a position within the industry. I suppose American could have been jerks about it and not allowed him to make that move. But they didn’t. And the ongoing rhetoric that Scott lays out in the industry as a result perpetuates the “feud”. Maybe a reality TV show is in order.) Delta and JetBlue were also called out for forcing employees into a 20% pay cut by reducing their hours. Without union boosters to help with the PR though, only United was highlighted. Perhaps that changes in the future as Delta continues to fight an organizing effort, but perhaps people tire of the topic as well. Bottom line, Doug felt extremely strong about the original move at Delta and then JetBlue, and United was last in its attempt. This wasn’t personal towards Ed, Robin or Oscar (Scott), it just was his view and he laid it out there. We can debate he may not have wasted the time or energy doing so, but having been intimately involved in the crafting of the CARES language on this topic, he felt fairly strong about violating the spirit of it. You can agree or disagree with his stance, but none of us was in the room when the language was crafted and agreed upon. To walk out and then begin devising ways around it appears disingenuous, at best.
2.United is crossing a line here and should be smacked publicly for it. (Response: United has certainly taken a ready, fire, aim approach in this current crisis. Perhaps today’s announcement of their new president is intended to help tether that approach. Using words like culture, community engagement, and thoughtful appear to point to a desire to think longer term. There are very good people at United and they love their airline as much as any other employee loves his or her airline. Everyone takes a roll in the barrel at some point; United is currently taking theirs, self-induced or not.)
3.American isn’t doing enough to conserve its cash and is just trying to divert attention. (Response: Have heard this as well, and only the results will tell. Being fairly close to that scene, there is an incredible amount of cost-cutting work underway, not just short-term expense reduction. Early retirements, looking at people allocation, looking at outsourced and insourced functions, looking at headcount. And not simply looking…that’s a word that means running traps on what can be taken out. That said, the metaphor I’m using of late is when we crawl out of the bunker after the nuclear war, we’re going to need people who can create fire with two rocks, gather and clean water, and identify and secure any potential food sources. If you’ve killed or alienated everyone around you during the apocalypse, including your customers, you’re going to be hurting. So there’s absolutely an imperative to survive the crisis and avoid bankruptcy at every airline, and there’s also something out beyond that requires an unwavering and intense focus called movement and life. We are all in the business of moving people and must lay the groundwork for a safe and consistent experience for all customers in this new world.)
Elaine,
Some very interesting insights. Thank you. I’m always amazed at how some apparently want American and United to file for Chapter 11 bankruptcy protection. It also amazes me to see how everyone seems to “know” with absolute certainty which airlines will survive and which will fail. The bottom line is that no one knows at this point. There are certainly warning “flags” if you will. It’s relatively obvious that airlines with better balance sheets will have a better chance to get through this without major damage.
But make no mistake – all airlines are suffering.
Bankruptcy can help with a company’s balance sheet, but it can’t solve a revenue problem. Bankruptcy also carries a lot of risks. Among them is that no one knows what a judge will decide. An equally important risk is that bankruptcy is an expensive and time-consuming process. There ways to refinance debt and restructure balance sheets that don’t require a trip into bankruptcy court, and it appears that all of the airlines are working on those issues. I seriously doubt that any of the major airlines will be liquidated, even though there are a few who apparently want that to occur.
Most of the predictions I’ve read assume nothing will change. That assumption is clearly false. This situation is fluid. No one knows what will happen in the next few weeks, much less the next few months.
This article is spot on. Im shopping for tickets to check on my parents soon and there is no way I’m giving United the business because I can’t be sure that they are going to conduct themselves in an ethical and forthright way should the trip have some complications.
I’m inclined to think that United is doing what it has to do to avoid going out of business. It can’t wait and of course nobody likes it. BA announced that they will fire 12,000 staff and Ryanair will fire 3,000. Virgin Atlantic is teetering on the brink of bankruptcy, as is Lufthansa. FlyBe and Virgin Australia are already gone. It is quite likely that traffic will not regain former levels for two years, maybe more. Therefore, airlines are way overstaffed. Air Canada has permanently grounded 79 aircraft. If you assume an average of ten pilots per aircraft, then they now have 790 pilots too many. Now what? This virus thing is a huge economic disaster on a scale that we have never seen before. Hard to imagine what the industry will look like ten years from now. The first obligation of any business is to survive.
Boeing’s CEO is supposed to be on one of the national morning news shows tomorrow but snippets from the recorded interview have already been released. In response to a question from the host, he says that he expects that at least one “major” US airline will go out of business before the end of the year.
Wow. So, do you think that passenger-carrying commercial aviation will come unglued on 1 October, 2020? You might be right! Especially, since 1 October is the date of a FULL MOON!
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