United CEO Scott Kirby Discusses Middle Seats, Bankruptcy, and New Aircraft

Earlier this week, United CEO Scott Kirby attended the Bernstein 36th Annual Strategic Decisions Conference and held a 50-minute discussion on the company’s operations during the coronavirus. Topics included the middle seat, bankruptcy, new aircraft, and travel demand. Here’s the rundown.

Middle Seats

While some airlines, such as JetBlue and Delta, have committed to blocking off the middle seat for social distancing purposes, United has waivered. During the discussion, Kirby made it clear that United does not plan on mandating that the middle seats be left vacant, stating,

“I’ll try to be careful here. You can’t be six feet apart on an airplane, middle seat or not. … What makes an airplane safe is HEPA air filters recirculating the air every two to three minutes, wearing a mask on board the airplane, and cleaning the airplane.”

Bankruptcy

In 2002, United filed for bankruptcy following the 9/11 terrorist attacks. Because of the impact of the pandemic, some have been wondering if the company would go down that route again as it would get it out of labor contracts and aircraft leases. However, when asked if he is considering it, Kirby said that option was not on the table. He explained,

“I’ll try to be calm, since I’m on video. To me, it’s like the dumbest question possible. We are not going to file for bankruptcy. It would be the absolute last thing to do. I can’t imagine why people think that’s a good business strategy. People ask me, ‘Is that the right way to restructure the business?’ I don’t think that at all. Zero percent. No chance. It’s worse for shareholders, for creditors, for employees. It’s worse for every constituent that we have.”

New Aircraft

While it is common for airlines to replace older aircraft with new ones, Kirby believes that it not the financial move right now. He explained,

“Beyond the airplanes that we’re already kind of locked in on, I think it’s going to be a while before we’re taking new deliveries. The less risky financial decision is to keep the older airplanes. I view my job as chief risk manager, particularly as we go through a crisis. That just changes your perspective on new aircraft.”

To date, United remains the only one of the major three U.S. carriers to not retire an aircraft type during the crisis. Rather than proactively retiring, Kirby said he wants to wait on demand to improve. He said,

“There’s no upside to doing it today versus collecting some more information and collecting more data, and we can make a better decision, a month from now, or two months from now, or four months from now.”

Improved Demand

Many airlines saw their lowest point in April, with cancellations outpacing new bookings. Many airlines see this as good because now things can only get better. Kirby said,

“It’s just mathematical. As more time goes by, there’s fewer bookings to be canceled.”

Kirby continued to explain that United’s passenger traffic has increased since April, having reached 50,000 flown on Wednesday. He said,

“We have a long way to go. It should be over a half a million. But it’s certainly headed in the right direction.”

What do you think about Scott Kirby’s assessments? Let us know in the comments!