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]
Jun 28, 2021, 11:08 pm
#1276
Moderator: United Airlines
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There were two types of loans for airlines in CARES act
Payroll Support Plan (PSP) which was designed to be more of a grant / forgiven loan. These were the funds that UA used to pay employees versus laying then off.
The separate operational loans (with the government receiving warrant options) were true loans and the airlines have started paying those back.
Discussion of the decision to provide these loans is a topic of OMNI/PR
Payroll Support Plan (PSP) which was designed to be more of a grant / forgiven loan. These were the funds that UA used to pay employees versus laying then off.
The separate operational loans (with the government receiving warrant options) were true loans and the airlines have started paying those back.
Discussion of the decision to provide these loans is a topic of OMNI/PR
Sep 9, 2021, 7:41 am
#1277
Join Date: Jun 2007
Location: SRQ, PDX
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Sep 9, 2021, 7:46 am
#1278
Join Date: Mar 2009
Posts: 2,295
On the back of the last job reports, it's sadly not surprising.
This is the underlying article for those that are interested: https://www.wsj.com/articles/u-s-air...nt-11631188178
This is the underlying article for those that are interested: https://www.wsj.com/articles/u-s-air...nt-11631188178
Sep 9, 2021, 8:48 am
#1279
Join Date: Jan 2005
Location: New York, NY
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Looks like it will be at least another quarter or two before we can anticipate a meaningful improvement in business travel demand.
In terms of passenger-facing impact, that likely means no Polaris lounges until well into 2022.
In terms of passenger-facing impact, that likely means no Polaris lounges until well into 2022.
Sep 9, 2021, 8:57 am
#1280
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I don't think that's realistic. Business travel demand will never go anywhere near what it once was. Most businesses realize that travel is rarely necessary - those that haven't will fail.
Sep 9, 2021, 8:59 am
#1281
FlyerTalk Evangelist
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Looking at the seat map of a widebody flight I am on this month - oof! (I wouldn't be surprised if it goes out in a narrowbody).
Sep 9, 2021, 9:06 am
#1282
Join Date: Jan 2005
Location: New York, NY
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But right now, widespread business travel is essentially zero, minimal. In-person events will eventually resume, some people will get back out on the road, international business travel will resume in some measure. It's just not happening in 2021, and that's the point. Capacity cuts will follow.
When I say "meaningful improvement", I don't mean a snap-back to 2019. I just mean improvement, as in quarter-over-quarter growth, and right now things are trending in the opposite direction.
Sep 9, 2021, 9:13 am
#1283
Join Date: Aug 2010
Location: Morris County, NJ
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Posts: 2,305
Maybe for internal business, sure. But for those of us in sales? Nothing - and I really mean nothing - garners sales like face-to-face in person meetings.
I'm extremely lucky in my industry; with several decades (how the heck did I get that old?) of relationships with my largest clients, I've been doing well through the pandemic. But if I'm being honest, I'm more "farming" than "hunting." I've got few new relationships and mostly just extending existing ones.
That's not sustainable over the long haul. It's a good cycle for now, and has let us prosper in the storm, but not healthy over the long haul for business.
I'll be back out there. Already have been for some small hops, but once my clients are back in their offices, I'll be alongside them, wherever that may be.
I live in a very high tech industry, but my most potent techniques and tactics are as old as time.
Sep 9, 2021, 9:51 am
#1284
Join Date: Sep 2008
Location: AUS
Programs: BAEC Gold, AA PPro, Hyatt Globalist, Amex Plat
Posts: 7,043
It's like the sign in some bars that says, "Free beer tomorrow."
Regards
Sep 9, 2021, 10:10 am
#1285
Used to be MBS PremExec
Join Date: Sep 2000
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My business is centered around exhibiting at B2B trade shows around the US. I also travel internationally (mostly China) to procure those products that we in turn take orders for at trade shows. We deal in (non-tech) lower-end consumer goods.
Domestic trade shows are happening again..We've done a fraction this year of what we'd done in the past, but they are happening. We're looking at doing more in 2022, as some say they're "definitely occurring"...Some we haven't done since 2019. Our customers are clamoring for us to do them, as they need to attend such trade shows to continue to get product. One of our industries had a show last month that we ended up passing on because we simply didn't have enough shippable product available to justify the large expense of a show, but the reports were that the aisles were packed and the retailers/wholesalers in attendance were placing orders. Pent up demand was a huge factor.
Early on in the pandemic, we tried these virtual trade shows, and that was a waste of time for all involved...We did them domestically to sell product and I briefly tried international ones (like Canton Fair)--gave up on both being a seller and a buyer after one of each. No thanks. Too cumbersome and is certainly not a replacement for looking at goods live and in person.
I know our experience is purely anecdotal and I think that we're still a long, long way (longer than a quarter or two that keeps coming and going) from business travel really picking up...But it's not completely dead from my perspective, and agree with dmurphynj above who said face-to-face is more vital for sales--certainly is for the buying and selling on our side. Consultants, IT guys and sales in other industries might be different and I realize our experience doesn't reflect everyone else.
Domestic trade shows are happening again..We've done a fraction this year of what we'd done in the past, but they are happening. We're looking at doing more in 2022, as some say they're "definitely occurring"...Some we haven't done since 2019. Our customers are clamoring for us to do them, as they need to attend such trade shows to continue to get product. One of our industries had a show last month that we ended up passing on because we simply didn't have enough shippable product available to justify the large expense of a show, but the reports were that the aisles were packed and the retailers/wholesalers in attendance were placing orders. Pent up demand was a huge factor.
Early on in the pandemic, we tried these virtual trade shows, and that was a waste of time for all involved...We did them domestically to sell product and I briefly tried international ones (like Canton Fair)--gave up on both being a seller and a buyer after one of each. No thanks. Too cumbersome and is certainly not a replacement for looking at goods live and in person.
I know our experience is purely anecdotal and I think that we're still a long, long way (longer than a quarter or two that keeps coming and going) from business travel really picking up...But it's not completely dead from my perspective, and agree with dmurphynj above who said face-to-face is more vital for sales--certainly is for the buying and selling on our side. Consultants, IT guys and sales in other industries might be different and I realize our experience doesn't reflect everyone else.
Sep 9, 2021, 10:41 am
#1286
Moderator: United Airlines
Join Date: Jun 2007
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Programs: UA Plat 1.997MM, Hyatt Discoverist, Marriott Plat/LT Gold, Hilton Silver, IHG Plat
Posts: 66,861
The full UA 8-K statement
Item 7.01 Regulation FD Disclosure. United Airlines, Inc. ("United"), a wholly-owned subsidiary of United Airlines Holdings, Inc. ("UAL" and, together with United, the "Company"), has seen in the last few weeks a deceleration in customer bookings for travel compared to previous estimations due to the recent spike in COVID-19 cases associated with the Delta variant. Prior to the most recent rise in cases, the Company's financial results were on track to meet its guidance for the third quarter of 2021, including achieving adjusted pre-tax income of $82 million in July 2021 and total revenue per available seat mile (TRASM) of up 1% in the month of July 2021 versus July 2019. However, consistent with changes in demand trends during prior surges of COVID-19 cases, bookings and yield declined, and as a result the Company now expects total revenue for the third quarter of 2021 to be down approximately 33% versus the third quarter of 2019.
The Company has adjusted its capacity to align with the lower demand environment and, as of the date of this report, now expects third quarter 2021 capacity to be down at least 28% versus the third quarter of 2019, which compares to initial guidance of down 26% versus the third quarter of 2019. The Company is currently adjusting fourth quarter 2021 capacity to better match the changes in demand. Despite lower capacity, consolidated unit cost per available seat mile (CASM-ex) for the third quarter of 2021 is currently expected to remain similar or better compared to the initial guidance provided at the start of the quarter of up approximately 17% versus the third quarter of 2019. As a result of the weakness in revenue that the Company has experienced to date and expects to continue to experience, the Company now expects an adjusted pre-tax loss in the third quarter of 2021 and if current trends continue, the Company also now expects an adjusted pre-tax loss in the fourth quarter of 2021.
Since the onset of the COVID-19 crisis, the Company has not expected the recovery to follow a linear path. The Company's long-term United Next targets remain unchanged as the current spike in cases has been significantly less impactful to date than prior spikes and is expected to be temporary in nature. Based on demand patterns following prior waves of COVID-19, the Company expects bookings to begin to recover once cases peak.
The Company has adjusted its capacity to align with the lower demand environment and, as of the date of this report, now expects third quarter 2021 capacity to be down at least 28% versus the third quarter of 2019, which compares to initial guidance of down 26% versus the third quarter of 2019. The Company is currently adjusting fourth quarter 2021 capacity to better match the changes in demand. Despite lower capacity, consolidated unit cost per available seat mile (CASM-ex) for the third quarter of 2021 is currently expected to remain similar or better compared to the initial guidance provided at the start of the quarter of up approximately 17% versus the third quarter of 2019. As a result of the weakness in revenue that the Company has experienced to date and expects to continue to experience, the Company now expects an adjusted pre-tax loss in the third quarter of 2021 and if current trends continue, the Company also now expects an adjusted pre-tax loss in the fourth quarter of 2021.
Since the onset of the COVID-19 crisis, the Company has not expected the recovery to follow a linear path. The Company's long-term United Next targets remain unchanged as the current spike in cases has been significantly less impactful to date than prior spikes and is expected to be temporary in nature. Based on demand patterns following prior waves of COVID-19, the Company expects bookings to begin to recover once cases peak.
Sep 9, 2021, 11:15 am
#1287
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Any airline not actively working on a Plan B for a new normal for global and domestic travel is setting themselves up for a world of hurt - and bankruptcy. We can hope for the best, but any smart business is always planning for the worst, and I don't get the warm-fuzzies that doing so is on Kirby's agenda based on his constant pollyanna-ish announcements that are just not grounded in reality.
Sep 9, 2021, 12:09 pm
#1288
Join Date: Jan 2005
Location: New York, NY
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Any airline not actively working on a Plan B for a new normal for global and domestic travel is setting themselves up for a world of hurt - and bankruptcy. We can hope for the best, but any smart business is always planning for the worst, and I don't get the warm-fuzzies that doing so is on Kirby's agenda based on his constant pollyanna-ish announcements that are just not grounded in reality.
A shallow dive into the rise (and current, predictable decline) of the delta cycle supports the notion that those regions being hardest-hit are vaccination laggards. We'll see if things turn out differently if/when the mu or lambda variants become dominant.
Sep 9, 2021, 12:40 pm
#1289
Join Date: Jun 2007
Location: SRQ, PDX
Programs: UA 1 MM, AA, DL
Posts: 930
"As a result of the weakness in revenue that the Company has experienced to date and expects to continue to experience, the Company now expects an adjusted pre-tax loss in the third quarter of 2021 and if current trends continue, the Company also now expects an adjusted pre-tax loss in the fourth quarter of 2021."
Bad news for those anticipating the return of glassware inflight?
Bad news for those anticipating the return of glassware inflight?
Sep 9, 2021, 12:51 pm
#1290
Join Date: May 2013
Posts: 3,361
We're talking years not quarters - at this point it's quarters before this industry learns whether or not it gets absolutely slaughtered now that leisure demand is going off a cliff with kids going back-to-school. Incremental pops in business and leisure travel are nothing more than temporary pops, and every time a new variant comes up, and there will be more after delta, you can rest assured of that, travel takes another hit, and the economy hits a speed bump.
Any airline not actively working on a Plan B for a new normal for global and domestic travel is setting themselves up for a world of hurt - and bankruptcy. We can hope for the best, but any smart business is always planning for the worst, and I don't get the warm-fuzzies that doing so is on Kirby's agenda based on his constant pollyanna-ish announcements that are just not grounded in reality.
Any airline not actively working on a Plan B for a new normal for global and domestic travel is setting themselves up for a world of hurt - and bankruptcy. We can hope for the best, but any smart business is always planning for the worst, and I don't get the warm-fuzzies that doing so is on Kirby's agenda based on his constant pollyanna-ish announcements that are just not grounded in reality.