Mar 20, 2020, 9:29 pm
Last edit by: WineCountryUA
Please do not modify or remove
In recent days a number of threads have started touching on the impacts on UA as a business going forward due to the travel disruption of COVID-19 --- including multiple Viability / Bankruptcy / Bailout discussions. While inconceivable a few months ago, UA (and all commercial airlines) is facing challenges that are uncharted.
This consolidated thread has been created by merging a number of existing threads that trend to address essentially the same subjects.
Some thread guidelines
-- This thread / forum is for discussing UA and the UA traveler, so please focus on UA in these discussions. Other forums exist to discuss other carriers or the industry in general -- we do just UA here.
-- This thread is for discussion of how UA gets from here to its future state.
-- All the standard FT rules apply. We will have a civil, constructive, collegial discussion -- even in these turbulent times.
-- While much of this will play out in the political arena, this forum is not the place for political / OMNI discussions. Please use threads in appropriate forums for that, such as Covid-19 US tax cuts or fiscal stimulus
-- Similarly, discussions of the evils / greed of corporations or other broad societal issues are out of scope, those are for OMNI -- let's stick to discussing UA, its past and its future here
-- Please do not start new threads on these topics in the UA forum. One reason for this consolidated thread was to minimize the redundant posts in separate threads. There is plenty of room in the scope of this thread to cover all aspects of these topics. (Note things like M&A, restructuring, ... would all be in scope).
-- Please once you have laid out your position, do not repetitively re-state that opinion. It is usually a better discussion if many participate vs a few dominating the thread
On behalf of the UA Moderator Team
WineCountryUA
In recent days a number of threads have started touching on the impacts on UA as a business going forward due to the travel disruption of COVID-19 --- including multiple Viability / Bankruptcy / Bailout discussions. While inconceivable a few months ago, UA (and all commercial airlines) is facing challenges that are uncharted.
This consolidated thread has been created by merging a number of existing threads that trend to address essentially the same subjects.
Some thread guidelines
-- This thread / forum is for discussing UA and the UA traveler, so please focus on UA in these discussions. Other forums exist to discuss other carriers or the industry in general -- we do just UA here.
-- This thread is for discussion of how UA gets from here to its future state.
-- All the standard FT rules apply. We will have a civil, constructive, collegial discussion -- even in these turbulent times.
-- While much of this will play out in the political arena, this forum is not the place for political / OMNI discussions. Please use threads in appropriate forums for that, such as Covid-19 US tax cuts or fiscal stimulus
-- Similarly, discussions of the evils / greed of corporations or other broad societal issues are out of scope, those are for OMNI -- let's stick to discussing UA, its past and its future here
-- Please do not start new threads on these topics in the UA forum. One reason for this consolidated thread was to minimize the redundant posts in separate threads. There is plenty of room in the scope of this thread to cover all aspects of these topics. (Note things like M&A, restructuring, ... would all be in scope).
-- Please once you have laid out your position, do not repetitively re-state that opinion. It is usually a better discussion if many participate vs a few dominating the thread
On behalf of the UA Moderator Team
WineCountryUA
UA's Viability / Financial Future due to the COVID-19 Era [Consolidated]
Jan 21, 2021, 9:10 pm
#1111
Join Date: Sep 2006
Location: HNL
Programs: UA GS4MM, MR LT Plat, Hilton Gold
Posts: 6,447
Jan 21, 2021, 9:28 pm
#1112
Join Date: Oct 2006
Location: ANP
Programs: UA 1k, Marriott Plat, HH gold, Avis/Hertz Pres
Posts: 1,408
2025 will finally have levels back. You figure even if you do a million a day, times 2x thats 660 days. Then add in other issues, and not a million happening, we are already in 2024, so 2025 first normal year unless they say .... it, which they should at this point. 2025, we wont be able to fly anywhere as there will be no economy or airlines left
UA files Q4 2021
UA files Q4 2021
Jan 21, 2021, 10:02 pm
#1113
A FlyerTalk Posting Legend
Join Date: Sep 2002
Location: LAX/TPE
Programs: United 1K, JAL Sapphire, SPG Lifetime Platinum, National Executive Elite, Hertz PC, Avis PC
Posts: 42,165
2025 will finally have levels back. You figure even if you do a million a day, times 2x thats 660 days. Then add in other issues, and not a million happening, we are already in 2024, so 2025 first normal year unless they say .... it, which they should at this point. 2025, we wont be able to fly anywhere as there will be no economy or airlines left
UA files Q4 2021
UA files Q4 2021
Jan 22, 2021, 11:53 pm
#1114
Join Date: Dec 2018
Programs: $9 Fare Club
Posts: 1,478
UA guiding that expect to see an uptick in demand from June, so the pessimism here is quite something - and seems to be totally predicated on the Government pulling the rug. Which they wont.
2025 is... fanciful pessimism to say the least.
2025 is... fanciful pessimism to say the least.
Jan 23, 2021, 12:22 am
#1115
FlyerTalk Evangelist
Join Date: Oct 2001
Location: Austin, TX
Posts: 21,359
The problem is, they don't need an uptick. An uptick would merely slow the bleeding a bit. UA's business model fundamentally can't work at yield levels anywhere near what they're seeing today. Previous generations of management have proven that they can't "shrink themselves to success," and there's no reason to think that this would be any different.
In that same guidance, UA said that it expected to reach 2019 margins in 2023. People talking about 2025 aren't that much more pessimistic than UA themselves.
In that same guidance, UA said that it expected to reach 2019 margins in 2023. People talking about 2025 aren't that much more pessimistic than UA themselves.
Jan 23, 2021, 12:37 am
#1116
Join Date: Jan 2018
Programs: UA LT GS | UA LT Club | Marriott LT Titanium
Posts: 1,250
Agreed. Another 1.5MM doses injected in the last 24 hrs, bringing the US to nearly 20MM doses administered.
I think the UA viability naysayers will capitulate once the 1st major country allows unrestricted entry to vaccinated travelers. Hawaii will likely be first distant location, but it doesn't count. Of UA's long-haul destinations, I could see Singapore, Israel, or Taiwan being the first. That'll open the int'l floodgates.
As for domestic travel, I'm confident we'll see very healthy 2021 numbers for late-summer, shoulder, and holiday travel. In fact, I just bet a colleague that 'Sunday after Thanksgiving' domestic travelers will be within 20% of 2019 levels. Let me know if you think I'll win!
I think the UA viability naysayers will capitulate once the 1st major country allows unrestricted entry to vaccinated travelers. Hawaii will likely be first distant location, but it doesn't count. Of UA's long-haul destinations, I could see Singapore, Israel, or Taiwan being the first. That'll open the int'l floodgates.
As for domestic travel, I'm confident we'll see very healthy 2021 numbers for late-summer, shoulder, and holiday travel. In fact, I just bet a colleague that 'Sunday after Thanksgiving' domestic travelers will be within 20% of 2019 levels. Let me know if you think I'll win!
Jan 23, 2021, 12:48 am
#1117
FlyerTalk Evangelist
Join Date: Oct 2001
Location: Austin, TX
Posts: 21,359
I don't buy into the concept of the "new normal," but when UA's own estimates are saying it will take them until 2023 to reach 2019 margins, I'm going to give them at least a little bit of credit.
Jan 23, 2021, 4:52 am
#1118
FlyerTalk Evangelist
Join Date: May 2000
Location: TPA for now. Hopefully LIS for retirement
Posts: 13,680
(This is not to say in won't happen in 2021, only that UA - and everyone else - really has no idea what will be happening by June.)
Jan 23, 2021, 11:32 am
#1119
Join Date: May 2001
Posts: 4,771
Not all upticks are created equal. Maw and Paw and the two rugrats going to Disney once a year are not going to make a hill of beans difference to airlines returning to profitability, it helps to stem the red ink only. The return of business travel is key and I believe is a long way off, things have changed for the airlines and that is why we are hearing predictions of 2022 and beyond for profitability to be even a glimmer in the airlines eyes. Based on that I believe some further consolidation is highly likely.
Jan 23, 2021, 1:56 pm
#1120
Join Date: Dec 2018
Programs: $9 Fare Club
Posts: 1,478
Likely we'll hit a critical mass (>70%) of vaccinations sometime in Q3, at which point you'll begin to see the floodgates open in terms of demand, there's a vast amount of people the pandemic hasn't affected who have otherwise been accumulating income and I think they'll want to spend some of that via rewarding themselves with a vacation.
UA/DL/AA have all done some measure of cost cutting via the severance packages, they've also cut back on some frills that I expect to see persist into new normal (you're not going to be catered a full meal in Domestic F anymore imo). They'll all be fine, y'all seem to be forgetting the banks have fairly substantial skin in the game through the various loyalty program securitizations they've all done.
UA/DL/AA have all done some measure of cost cutting via the severance packages, they've also cut back on some frills that I expect to see persist into new normal (you're not going to be catered a full meal in Domestic F anymore imo). They'll all be fine, y'all seem to be forgetting the banks have fairly substantial skin in the game through the various loyalty program securitizations they've all done.
Jan 23, 2021, 2:51 pm
#1121
Join Date: Mar 2001
Location: New York / Hawaii
Programs: UA Global Services, HH Diamond
Posts: 5,176
I talked to my UA salesperson this past week; she told me most of their corporate clients are holding off on air travel through at least June if not later.
I think a lot of businesses are using June as a placeholder because thats when the vaccines reach a large part of the population. Trump's vaccine plan was to get out 1,000,000+ vaccines a day which we've hit and Biden said yesterday he sees no reason to change Trump's plan or go higher. (Probably because of manufacturing limits?)
But two concerns I have with air travel are 1)further travel restrictions and 2) lack of efficacy with the vaccines. With the Biden administration yesterday saying Trump's handling of things now is fine, that tamps down on rumors of additional restrictions to domestic flying that were being mumbled in recent weeks (i.e. requiring negative COVID test before domestic flights too.) But there's growing concerns about vaccine efficacy with that second study published on Thursday that shows the vaccines don't work on the latest mutations out of Africa/Europe. If the manufacturers need to go through another 8 months of clinical trials for a vaccine update, that just pushes recovery of everything into 2022. These 2 are big beadwind risks facing the industry, and I don't know if UAs new severence packages does enough to keep them nimble through these unknowns.
I think a lot of businesses are using June as a placeholder because thats when the vaccines reach a large part of the population. Trump's vaccine plan was to get out 1,000,000+ vaccines a day which we've hit and Biden said yesterday he sees no reason to change Trump's plan or go higher. (Probably because of manufacturing limits?)
But two concerns I have with air travel are 1)further travel restrictions and 2) lack of efficacy with the vaccines. With the Biden administration yesterday saying Trump's handling of things now is fine, that tamps down on rumors of additional restrictions to domestic flying that were being mumbled in recent weeks (i.e. requiring negative COVID test before domestic flights too.) But there's growing concerns about vaccine efficacy with that second study published on Thursday that shows the vaccines don't work on the latest mutations out of Africa/Europe. If the manufacturers need to go through another 8 months of clinical trials for a vaccine update, that just pushes recovery of everything into 2022. These 2 are big beadwind risks facing the industry, and I don't know if UAs new severence packages does enough to keep them nimble through these unknowns.
Jan 23, 2021, 3:36 pm
#1122
FlyerTalk Evangelist
Join Date: Aug 2005
Location: BOS/EAP
Programs: UA 1K, MR LTT, HH Dia, Amex Plat
Posts: 31,974
True, but Hawaii is moving towards dropping testing/quarantine requirements for vaccinated people.
I feel dozens of countries will do exactly this.
March/April/May could see record forward bookings for United.
We may even want to change the title of this thread to 'United's Financial Health Exiting Covid'
I feel dozens of countries will do exactly this.
March/April/May could see record forward bookings for United.
We may even want to change the title of this thread to 'United's Financial Health Exiting Covid'
Remember that vaccines for kids are not available and won't be for a while and then that needs to roll out. So family vacation to Hawaii or overseas ... 2022 at the earliest.
I love the optimism ... but let's get down to reality
Jan 23, 2021, 4:46 pm
#1123
A FlyerTalk Posting Legend
Join Date: Sep 2002
Location: LAX/TPE
Programs: United 1K, JAL Sapphire, SPG Lifetime Platinum, National Executive Elite, Hertz PC, Avis PC
Posts: 42,165
As for domestic travel, I'm confident we'll see very healthy 2021 numbers for late-summer, shoulder, and holiday travel. In fact, I just bet a colleague that 'Sunday after Thanksgiving' domestic travelers will be within 20% of 2019 levels. Let me know if you think I'll win!
Jan 23, 2021, 7:04 pm
#1124
Join Date: May 2013
Posts: 3,361
Outside of a miraculous event, I would say everyone will be filing by Q4 - I am just trying to time my purchase of puts across the industry. I think this is best for the business in general - dump the shareholders, renegotiate the contracts, get rid of excess leased capacity and maybe clean house at the management level and board, then start over with a clean slate based on the 'new normal'.
Filing CH11 doesn’t do a whole lot for UAL: debt is very low cost, labor agreements are efficient and not many old airplanes are leased. There’s always a bit that could be cleaned up, but the cost of bankruptcy is excessive.
Jan 23, 2021, 8:10 pm
#1125
A FlyerTalk Posting Legend
Join Date: Sep 2002
Location: LAX/TPE
Programs: United 1K, JAL Sapphire, SPG Lifetime Platinum, National Executive Elite, Hertz PC, Avis PC
Posts: 42,165
So the trajectory is not looking good for United, or any global airline, in 2021. I would say only B6 being mostly domestic/Caribbean, AS and WN are in a better position to weather the storm since they don't rely on international traffic.
I am in still in favor of a forced CH11 to eliminate shareholder equity before any further government hand-outs to ensure the US Treasury has complete control and retains all the proceeds from any future re-issuance of stock.