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]
Mar 11, 2020, 5:05 am
#76
FlyerTalk Evangelist
Join Date: May 2012
Location: MCO
Programs: AA, B6, DL, EK, EY, QR, SQ, UA, Amex Plat, Marriott Tit, HHonors Gold
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Mar 11, 2020, 10:37 am
#77
Join Date: Mar 2005
Location: Kansas City, MO
Programs: AA Gold
Posts: 3,648
redeposit fee waived for canceled award tix
I went ahead and called UA yesterday 3/10 to change these 2 tickets. After waiting 77 minutes hold they picked up. I first tried to change to the better flights but the agent could not get the tickets to reprice at 60K miles. He said I should cancel and have the miles redeposit and then rebook the new ticket myself. He said if I canceled online there would be a redeposit fee but if I canceled with him over the phone no charge. He said the miles should be back in my account within 2 hours. While I was still on the phone with him I logged out and logged in and the 70K miles were there. Quickly rebooked the tickets 60K, no problem. I saved 20K miles total and 3 hours of travel. I just hope there are still plans flying to Europe June 23, that everything doesn't get cancelled.
Mar 11, 2020, 1:10 pm
#78
Join Date: Dec 2004
Location: Lovely Tahoe City
Programs: UA 1mm Gold. Former 1K and GS.
Posts: 951
One thing might help...Saudi Arabia is threatening to flood the oil markets. Now we could debate the OVERALL effects on the economy at large...But we won't.
Suffice to say that the airline model works better with less expensive fuel.
That was a big problem after 9/11. Oil prices spiked and the model just doesn't work with $125bbl oil.
Suffice to say that the airline model works better with less expensive fuel.
That was a big problem after 9/11. Oil prices spiked and the model just doesn't work with $125bbl oil.
Mar 11, 2020, 2:54 pm
#79
FlyerTalk Evangelist
Join Date: Jan 2009
Location: London & Sonoma CA
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Posts: 10,222
As to planes still flying in June, it's clear that they are planning very significant cutbacks. However, even if you get re-routed you are still 10k miles better off than before.
Mar 11, 2020, 3:13 pm
#80
Join Date: May 2009
Location: Washington, DC
Programs: UA 1K 1MM, AA, DL
Posts: 7,418
There's a big data point against your position: cabotage rules. If the public really viewed US airlines as horrible, you would see support for foreign competition coming in. Quite the opposite- basically every politician, even big time free traders, knows relaxing cabotage rules is political suicide. The public does not want the big 3 airlines to fail.
Mar 11, 2020, 3:21 pm
#81
Join Date: Jan 2005
Location: New York, NY
Programs: UA, AA, DL, Hertz, Avis, National, Hyatt, Hilton, SPG, Marriott
Posts: 9,450
United (and CO before it) always had the benefit of oil price collapses mitigated somewhat by commensurately reduced business travel demand from petroleum companies. Fortunately, the IAH region is less oil-dependent than it was during the last crash, and UA is more diversified away from IAH as a domestic linchpin, but that's still a structural challenge for the company in times of steep oil price declines. UA also has the most service to the shale oil-producing regions of the US, which are taking a pounding.
Mar 11, 2020, 4:56 pm
#82
FlyerTalk Evangelist
Join Date: Sep 2003
Location: Honolulu Harbor
Programs: UA 1K
Posts: 15,018
United (and CO before it) always had the benefit of oil price collapses mitigated somewhat by commensurately reduced business travel demand from petroleum companies. Fortunately, the IAH region is less oil-dependent than it was during the last crash, and UA is more diversified away from IAH as a domestic linchpin, but that's still a structural challenge for the company in times of steep oil price declines. UA also has the most service to the shale oil-producing regions of the US, which are taking a pounding.
I seem to recall DL bought a refinery at some point. They might be able to lock in some cheaper oil prices if they don't have long-term supply commitments to a producer(s).
Last edited by IAH-OIL-TRASH; Mar 11, 2020 at 5:02 pm
Mar 11, 2020, 9:51 pm
#83
Join Date: Jan 2005
Location: New York, NY
Programs: UA, AA, DL, Hertz, Avis, National, Hyatt, Hilton, SPG, Marriott
Posts: 9,450
Airlines (and fuel suppliers) are usually not paying spot prices for fuel from the refiners, so it'll probably be months to work through (what I am sure are ) higher priced hedges and take advantage of lower prices. Although I don't have direct contact w/ any fuel traders, I bet they're not committing jet fues at prices proportional to current crude spot prices.
Mar 11, 2020, 9:59 pm
#84
Join Date: Jan 2005
Location: New York, NY
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Posts: 9,450
Airlines (and fuel suppliers) are usually not paying spot prices for fuel from the refiners, so it'll probably be months to work through (what I am sure are ) higher priced hedges and take advantage of lower prices. Although I don't have direct contact w/ any fuel traders, I bet they're not committing jet fues at prices proportional to current crude spot prices.
Seriously? I will be the first to admit the virus is being over hyped, but it is disrupting millions of lives, and could very well crush the airline I have worked at for almost 2 decades. We are already seeing the airline offer some pilots reduced guaranteed hours, to not fly for a month. People's jobs are at risk... But gosh, as long as you are happy, who cares...
There's no doubt United's model is at serious risk of upheaval.
Last edited by WineCountryUA; Mar 13, 2020 at 1:06 am Reason: split post
Mar 11, 2020, 10:15 pm
#85
FlyerTalk Evangelist
Join Date: Oct 2001
Location: Austin, TX
Posts: 21,393
United is in a dramatically different position heading into this crisis than it was for 9/11. Simply put, the company has a lot of cash, a lot of assets, and strong fundamentals. I'm not concerned about a short-term collapse or bankruptcy, but I am less sanguine about the long term, especially to the extent that business travel patterns (and spending) change permanently from a reevaluation of corporate travel policies.
Last edited by WineCountryUA; Mar 13, 2020 at 1:07 am Reason: split post
Mar 11, 2020, 11:17 pm
#86
Join Date: Jan 2005
Location: New York, NY
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Posts: 9,450
UA's expenses last year suggested a run rate of $100 million per day; meanwhile, net bookings have dropped 70% domestically and 100% to Europe and Asia. Yes, some of those expenses can (and will) be cut, but $5 billion cash on hand doesn't sound as rosy when you cast it as "50 days' expenses."
United isn't on a "50 days to broke" timetable... nowhere near it. Most people in the business are planning for 6-9 months of dramatic revenue disruption (with a worst-case scenario of the percentages Kirby mentioned yesterday) and all of the majors are healthy enough to absorb that.
If things aren't clearly recovering a year from now, we will probably be looking at some Chapter 11 filings.
You need to meet some new pessimists. :/ If you apply the current fatality rate -- or even a more realistic rate that accounts for the fact that a lot of mild cases haven't been identified -- to some of the more pessimistic infection rates, you definitely end up with millions of deaths.
Last edited by WineCountryUA; Mar 13, 2020 at 1:07 am Reason: split post
Mar 11, 2020, 11:37 pm
#87
Join Date: Jul 2012
Posts: 1,115
We don't need a year, if this would heavily affect summer travel, we would see Chapter 11's. This is in line with the 6-9 months counting from when the crisis started. However, there is absolutely no reason to assume this would be the case given what we know about the virus. They're going to have to run some promos though to fill those INTL widebodies.
Mar 12, 2020, 1:10 am
#88
Join Date: Mar 2001
Location: New York / Hawaii
Programs: UA Global Services, HH Diamond
Posts: 5,178
I think its inevitable that there will be at least regional groundings if not a full nationwide flying ban in another 10 days or so. And even if its regional shutdowns, UA may not want to bother to waste fuel and crews on hub and spoke operations that don't bring anyone that wants to travel to where they go.
I'm glad UA lined up cash to protect themselves, but the impacts of all of the associated industries (like everyone at the airports, car rentals, etc) will probably make things look very different when we come out of the pandemix than they were before.
I'm glad UA lined up cash to protect themselves, but the impacts of all of the associated industries (like everyone at the airports, car rentals, etc) will probably make things look very different when we come out of the pandemix than they were before.
Mar 12, 2020, 3:51 am
#89
Join Date: Dec 2006
Location: Silicon wasteland
Programs: UA 1KMM
Posts: 1,381
UA's expenses last year suggested a run rate of $100 million per day; meanwhile, net bookings have dropped 70% domestically and 100% to Europe and Asia. Yes, some of those expenses can (and will) be cut, but $5 billion cash on hand doesn't sound as rosy when you cast it as "50 days' expenses."
Now, is it that net bookings = new booking - refunds, and if those cancel out, then they achieve net zero revenue for their international destinations? Anybody know the split between domestic/intl revenue and profit? And does net bookings = net revenue or net # of reservations?
Mar 12, 2020, 4:27 am
#90
Join Date: Nov 2010
Programs: UA Premier Platinum, DL Platinum
Posts: 597
Worse, I took Delta’s status-match challenge and have been spending Q1 on Delta. And I like it! (Delta’s far from perfect, but I’ve generally found the service nicer, and I’ve lucked out on JFK-LAX upgrades that United doesn’t even make possible.)
So, after spending about 15 years getting to 950,000 lifetime miles, my loyalty is rapidly zooming to DL. I’ll go for UA Million-Miler status, but I’m feeling much less sadness for United than I otherwise would. And low fares won’t be enough to get me onboard, especially since the miles won’t matter.
I hope and expect that United will pull through, mainly for the employees and in small part for my own account. But I feel very little loyalty to the company itself, and that means I may not be back for a while even after this pandemic subsides.
I don’t think I’m the only former loyalists whom UA’s driven off during the halcyon days of the economic climax. And I think that will hurt the carrier later this year.