United Airlines To Cut Capacity By 50%; Warns Of Revenue

United Airlines To Cut Capacity By 50%; Warns Of Revenue

(RTTNews) – United Airlines (UAL) said it will cut capacity by about 50% for April and May, as it expects a drop in demand due to the novel coronavirus outbreak. It also expects these deep cuts to extend into the summer travel period.

“Even with those cuts, we’re expecting load factors to drop into the 20-30% range — and that’s if things don’t get worse,” United Airlines Oscar Munoz, Chief Executive Officer, and Scott Kirby, President said in a letter to its employees.

The airline also said it would cut corporate officers’ salaries by 50%.

The airline also said it currently projects that revenue in March will be $1.5 billion lower than last March. It has served more than one million fewer customers in the first two weeks of March, than the same period last year, as a result of the COVID-19 pandemic.

“The bad news is that it’s getting worse. We expect both the number of customers and revenue to decline sharply in the days and weeks ahead,” Airline said.

Since late January, it has taken steps to aggressively manage this crisis by sharply reducing schedules, imposing a hiring freeze, introducing a voluntary leave program, dramatically reducing discretionary spending, cutting CEO base salary 100% and deferring a salary increase, United Airlines said in a statement.

On Friday, Delta announced a 40% schedule reduction and a 100% salary cut for their CEO and over the weekend, American said it will reduce its international capacity by 75%.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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