Notice: Trying to get property 'display_name' of non-object in /home/theproficientinv/public_html/wp-content/plugins/wordpress-seo/src/presenters/meta-author-presenter.php on line 40
Investor Strategy

U.S. airlines ditch 2020 forecasts, slash flights and costs on virus hit

imageStock Markets1 hour ago (Mar 10, 2020 02:12PM ET)

(C) Reuters. An American Airlines airplane sits on the tarmac at LAX in Los Angeles

By Tracy Rucinski and Rachit Vats

(Reuters) – Leading U.S. airlines on Tuesday ditched 2020 forecasts and unveiled more sweeping capacity cuts and cost-saving measures in response to the spreading coronavirus, while United Airlines (O:UAL) warned of a deep hit to the sector.

Speaking at an industry conference, United President Scott Kirby said he was preparing for a “dire scenario” under which revenue could fall as much as 70% in April and May and 20% in November and December.

The sector has been hard-hit as tourists cancel trips and businesses across the globe clamp down on anything other than essential travel over the fast-spreading epidemic, sparking a string of steps by airlines to tackle the impact of the outbreak.

Chicago-based United has taken some of the most aggressive measures to date, saying on Tuesday it had raised $2 billion in new capital to bring liquidity to $8 billion and slashed its 2020 capital expenditure by more than a third to about $4.5 billion.

“Let me blunt. Hope is not a strategy,” Kirby told investors, saying it could take the industry two to three years to fully recover.

United will not take jet deliveries or add capacity back to the market until it sees demand returning, he said. The airline expects to post a first-quarter loss due to the crisis, and Kirby and CEO Oscar Munoz are forgoing their base salaries until June 30.

Delta (N:DAL) said it had seen net bookings fall by as much as 25% to 30% and expected the situation to worsen further.

“This clearly is not an economic event. This is a fear event, probably more akin to what we saw at 9/11 than necessarily what we saw in 2009,” Delta Chief Executive Officer Ed Bastian said.

Delta is cutting domestic capacity by 10% to 15% and international by 20% to 25% and freezing hiring across the company, offering voluntary leave options to staff and looking at early retirement of older aircraft.


The U.S. airlines have all said that strong balance sheets, significantly lower debt levels and sizeable cash reserves versus prior crises make them better prepared to weather the crisis, but do not rule out additional capital raising or cost-cutting.

Also speaking on Tuesday, American Chief Executive Doug Parker said his airline had $7.3 billion in available capital and was eyeing cost savings such as reduced pilot training classes.

The airline, which is cutting domestic capacity by 7.5% in April and international by 10% for the upcoming summer season, also expects a fall in fuel prices to save $3 billion in 2020 costs. Oil sank around a fifth in value on Monday.

American, Delta and United have also suspended share buybacks and said they were prepared to take additional measures as needed.

In a message to employees on Monday, Southwest (N:LUV) CEO Gary Kelly said he was taking a 10% pay cut in response to a “severe recession” for the airline industry.

In an effort to encourage bookings, the largest U.S. airlines are allowing passengers to re-book tickets through April 30 without paying fees to change flights and others are running significant fare sales or cutting prices on some routes.

Alaska Airlines (N:ALK) is advertising airfares as low as $25 one way, while Spirit Airlines (N:SAVE) said it was cutting fares by up to 70%.

Speaking on Tuesday, Spirit CEO Ted Christie highlighted the budget carrier’s low-cost structure.

“Anyone can sell low fares, the issue is who can sell low fares at a profitable level?”

U.S. airlines see distant recovery as coronoavirus hits travel

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Most Popular

Your daily news source covering investing ideas, market stocks, business, retirement tips from Wall St. to Silicon Valley.

Disclaimer:, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 TheProficientInvestor. All Rights Reserved.

To Top