How United Airlines Expects The Coming Recovery In Air Travel To Unfold

United Airlines reported on it earnings call Wednesday that they came to an agreement with Boeing not to take 737 MAX deliveries in 2022. They’re putting off as much capital investment as they can – they project $700 million total in the last 9 months of 2020, excluding $1 billion for the current value of aircraft leases that gets capitalized.

We aren’t going to see a lot of new investment at United for awhile, with the airline expecting to restore its balance sheet – pay down debt – before making big investments.

However when the travel recovery comes, CEO Scott Kirby says “the recovery is going to be quick.”

  • While in May and early June the bookings they were getting happened relatively high to departure (such as three days out), that demand has tapered off.

  • They’ll build to a plateau of 50% of last year’s demand. He doesn’t know how long it will take to get there, but he expects it to stay there for awhile and not grow further.

  • That’s because while the airline expects “reasonable recovery” in “visiting friends and relatives” travel, other leisure travel won’t be back to 100%, and business demand will only start to come back, including “small group stuff” but large conventions and conferences aren’t going to be happening any time soon.

  • The rest of the recovery comes “with a widely available vaccine” though it’s not clear when that is – there are several vaccine candidates entering late-stage trials but by the time they’re scaled up and distributed to enough people to be broadly protective it could take awhile. United is expecting that’s late 2021, but hoping it could be earlier. (I’ve written I expect it to be mid-2021.)

It seems what United is saying is that we’ll gradually reach the point at which the recovery comes quickly.

In the meantime the airline is seeing an increasing number of its frequent flyers traveling again, though for leisure trips and not business trips and though there are still “a higher percentage of non-[MileagePlus] members on board” than there used to be. The gradual return of their core customers is encouraging.

Kirby continues to evangelize the safety of air travel, suggesting that actually being on a plane is one of the safest indoor environments given frequent replenishing of outside air and hospital-grade filters. The point that probably isn’t debatable is that on a relative risk basis flying is still safer than driving long distances. Of course it’s easier to drive home to quarantine if you’ve been exposed to someone with Covid-19 than it is to stay put, since you cannot simultaneously self-quarantine and fly.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. “an increasing number of its frequent flyers traveling again, though for leisure trips and not business trips” — hopefully ‘leisure’ means essential-type travel like moving, taking care of relatives, and the like — not vacationing. Unfortunately, I personally have the displeasure of knowing 3 dimwits who are constantly posting vacation photos from spots that are nowhere close to their home.

  2. @Jason – I have the displeasure of of seeing one dimwit lecturing people on a travel blog comments section about how they shouldn’t travel. You will be happy to know that I’ve got several trips lined up for August and September, nowhere close to my home, and if I could post pictures here, I would, just for you.

  3. Only a very uninformed person would chance flying right now. There are just too many unknowns. So, say there is a vaccine. It would take over a year to make enough vaccine, then another year to vaccinate everyone. It will not be a quick process. Kirby is an idiot, telling anyone that this will happen in a year.

  4. @Joe you need to get your eyes checked if you see a dimwit

    @Ryan people should be staying home

  5. I’m on a trip right now up and down the CA coast and couldn’t be happier. Life is too short to live in fear.

    I’m happy to take reasonable safety measures, but not putting life on pause as media feeds our country a steady diet of panic and fear.

    If you’re high risk – take extra measures.

    Policy at all the hotels is fine – wear mask indoor common areas and as you get seated for meals. Doesn’t make a ton of sense because we take masks off as soon as we’re seated, but not such an inconvenience to prevent me from enjoying good meals and supporting industry.

    To the anti-travel crowd: Do you realize how badly our economy (and mental health) is going to suffer due to this extended lockdown? You can’t print $ and give it to people who aren’t inputting anything into the economy without consequences.

    A tax increase won’t be enough – major inflation on the horizon and the lower/middle class with be paying taxes through this inflation.

    Oh well. I’m financially comfortable so just going with the flow.

  6. Travel will not pickup until we weed out the ignorant sheep, like Jason, who fail to do any independent research into this scam-demic.

  7. @Bob
    My company manufactures industrial equipment for everything from automobile assembly plants to food and beverage packaging plants to pharmaceutical manufacturing to medical device manufacturing. Some plants are expanding (food and beverage packaging) requiring new equipment to manufacture their products. Some existing equipment is breaking down, requiring service engineers and technicians to travel to the facilities to repair them. If one would do what you suggest, very shortly all food and beverage availability would come to a screeching halt. Pharmaceuticals would not be available. Unless you have your own garden or raise animals for food, you would soon starve to death. Surely you know someone who requires pharmaceuticals to survive.
    Following your suggestion would soon kill almost every person on the planet. COVID-19 will never come close to that.

  8. to: Bigsix. Thank you for at least one intelligent and realistic comment! Most of us are tired of the politically charged scare and bullying tactics used to covid-19. Someone dies of a heart attack but it’s listed as corona virus.
    Who will pay for all the money being printed and given out to many who choose not to work because they get more for staying at home? Very sad. I escaped communism many years ago for the greatest country on earth, filled with opportunities for all as long as one works hard without government handouts expectations. I would never even dream I would see America as we are experiencing today. All the communist, socialist loving and USA hating politicians have the freedom to move to any communist or socialist country on this planet if they think it’s so great. Why ruin this country? If you do not like it you have the freedom to leave.
    to: Desperado. Agree with you 100%. Live your lives to the fullest since none of has and idea how long our “privilege” of being alive and enjoying the fruits of our hard labor will last.

  9. @James N – you’re back! We missed your one-note trolling. Still a 1/10 though – try harder.

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