United CEO: Coronavirus impact for airlines "much worse" than 9/11 aftermath
United Airlines CEO Oscar Munoz said in a letter sent Monday to Treasury Secretary Steven Mnuchin and congressional leaders that the coronavirus outbreak's financial impact on airlines is "much worse than the stark downturn that we saw in the aftermath of the 9/11 attacks," as first reported by Politico.
Why it matters: Munoz asked government leaders "to please act quickly — this week — to protect our livelihoods" and projected that the company's revenue this month will be $1.5 billion lower than March 2019.
- United said in a statement Sunday that it will cut capacity by about 50% for the rest of March, April and May.
What he's saying:
"March is typically our busiest month of the year. This year, in just the first two weeks of March, we have welcomed more than one million fewer customers on board our aircraft than the same period last year.
"The bad news is that it’s getting worse. We expect both the number of customers and revenue to decline sharply in the days and weeks ahead.
"To be clear, we’re asking for bipartisan action by the Administration and the United States Congress this week to offer support to the men and women of United Airlines. Their jobs are now at risk because United had to stop service to countries with travel bans and we’ve been forced to dramatically shrink our schedule in response to dramatically shrinking demand."
The big picture: Many airlines are cutting capacity and making emergency cost reductions to align with diminished travel demand.
- Delta announced last week that it will reduce its flight capacity by 40% for the next four months due to the coronavirus outbreak, a dramatic increase from its original 15% reduction.
- Virgin Atlantic announced Monday that is asking staff to take eight weeks of unpaid leave as it reduces flights per day by 80% and grounds about 75% of its fleet.
What's next: President Trump vowed this week to "backstop" airlines that have been hurt by reduced demand during the coronavirus outbreak, saying the issue is "not their fault."
- U.S. airlines are seeking more than $50 billion in financial assistance from the government, which is three times the size of the industry’s bailout following the Sept. 11 attacks, according to the Wall Street Journal.