United Airlines falls 9% as the recovery from business travel and international travel is still a long way off
A United Airlines plane seen at the gate at Chicago OHare International Airport (ORD) on October 5, 2020 in Chicago, Illinois.
Daniel Slim | AFP | Getty Images
United Airlines shares fell more than 9% Tuesday morning after the airline reported its fifth straight quarterly loss, and its CEO expressed uncertainty about when two key pieces of business would recover from the coronavirus pandemic.
CEO Scott Kirby said the demand for long-distance international travel and business travel had declined by about 80% compared to 2019, depriving the airline of high-paying customers it relied on before the crisis.
“The big question is when those two things will come back and we’re not sure when that will be,” Kirby said in an interview with CNBC’s Squawk Box. He said both segments are expected to recover in the summer and the second half of the year.
The airline reported a $ 1.4 billion loss for the first quarter on Monday and said it could hit profitability even if demand for long-haul international and business travel returns to 35% of 2019 levels.
United on Monday announced new flights to countries like Greece, Iceland and Croatia, which have started opening their borders, and Kirby said the airline had strong bookings on those flights after the sale.
However, the State Department continues to advise travelers to reconsider traveling abroad. On Monday it said that “no travel” recommendations would be increased to 80% of the world’s countries as the Covid-19 pandemic posed an “unprecedented risk to travelers”.
Domestic vacation trip bookings to popular vacation destinations like beaches have surpassed 2019 levels, Kirby said.
Vacationers flying within the US have spearheaded the recovery of travel as more people are vaccinated, governments relax travel restrictions, and tourist attractions reopen. But companies still haven’t got many of their employees back on the streets, and international travel bans or quarantine requirements continue to keep many travelers closer to where they live.
“I don’t know how people find hotels,” Kirby said of popular vacation destinations.