United ‘bullish’ about business and international travel rebound | News

Cecilia Nysing

United Airlines executives are “bullish” about the carrier’s post-coronavirus recovery trajectory, and expect the business travel segment to accelerate significantly in the coming months.

“We don’t just see the light at the end of the tunnel, we’re exiting the tunnel,” chief executive Scott Kirby tells analysts on the company’s second-quarter results call on 21 July.

The recent rapid spread of the virus’ “Delta variant”, a more-contagious version of the original Covid-19 virus across the USA and Europe, has not made any dent in the the airline’s bookings so far, and executives expect it will not in the future, either.

“We haven’t seen any impact at all on bookings which continue to get stronger every week,” Kirby adds. ”The most likely outcome is the continued recovery in demand continues largely unabated.”

On 20 July the airline said that it narrowed its second quarter loss to $434 million, from a loss of $1.6 billion during coronavirus-plagued 2020. Without the government aid it received, the airline would have posted a second quarter loss of $1.3 billion.

Total revenue during the second quarter of 2021 was $5.5 billion, up from $1.5 billion during the same period a year ago, but still down 52% from 2019.

2022 MAY BE “BEST SEASON EVER”

In addition to strong domestic bookings, international and business travel are also rapidly returning to levels last seen during 2019, the Chicago-based carrier’s executives say. In fact, next summer could break record on the airline’s North Atlantic routes.

“The summer of 2022 has the potential to be our best season ever” for those routes, Kirby says, estimating that load factors on flights between North America and Europe could be as high as 70%. Asia, however, will likely lag behind and may not bounce back until a year later, due to continued strict travel restrictions for foreigners.

Kirby says the airline is in dialogue with the US government about a potential reopening to visitors from Europe and other important markets like China and Brazil.

So far, some European countries including France, Germany, Spain, Greece, Iceland and Croatia have re-opened to vaccinated tourists from the USA, but the administration of President Joe Biden has not reciprocated.

“All of us want to make sure we do this safely and confidently,” Kirby says. “We haven’t advocated for specific policies but if the government brings [ideas] forward, we are very open to any requirements that they have, and look forward to working with the admin to get [travel] back open.”

BUSINESS TRAVEL INFLECTION POINTS

Business travel is still down 60% from 2019 levels, United says, but the airline experienced an inflection point in June, says chief commercial officer Andrew Nocella. It expects two further important inflection points in the coming months – the end of the traditional summer holiday season in September, and the beginning of the new budget cycle in January.

By the end of the year, business travel will return to be about 40-45% lower than 2019 levels, Nocella says.

That said, the airline wants to continue to be a major player in the leisure market as well, he adds.

“As we rebuild the airline and the network, we are going to be a bigger player in the leisure-oriented markets especially in the first quarter period than we historically were,” Nocella adds.

“Everything is starting to return to normal,” he says. “60% of revenue for the third quarter is on the books, we have good visibility into July and August, and August looks really quite good.”

The airline can’t yet estimate September data, but “we still feel very bullish about that as business traffic returns”.

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