United Airlines Holdings Inc.
said it would cut domestic flights, as the spreading coronavirus depresses bookings.
Airlines world-wide have parked more than 1,000 planes as bookings have fizzled and concerns have risen that depressed demand could extend into the busy peak summer season.
The carrier said Wednesday it plans to store some wide-body jets and is offering staff unpaid leaves of absence in April. The effort is the latest by airlines to mitigate the shock to the industry caused by cascading travel restrictions and passenger concerns over flying. Companies including
are instructing their employees to cut out unnecessary travel.
Other U.S. carriers have sought to stimulate demand by offering passengers the option to change flights without penalties.
United will cut domestic capacity by 10% in April from its previous plan and international flying by 20%, Chief Executive Oscar Munoz and President Scott Kirby said in a message to staff. These cuts could extend into May.
The Chicago-based carrier has the biggest exposure to international markets among U.S. carriers. Half the cuts will be on trans-Pacific services and 10% on trans-Atlantic flights. The airline has already suspended most of its flights to China, South Korea and Italy, as have most of its U.S. peers.
Domestic cuts will involve 10 cities that will still have service from other United hubs, as well as a mix of schedule cuts and using smaller planes.
“We’re reducing the number of frequencies per week, finding routes with alternative travel options via other United hubs, and delaying start dates for seasonal travel to certain destinations—without closing any domestic stations,” the United executives said in the note.
United, like the rest of the industry, is wary of making cuts deep enough to trigger furloughs, and its unions broadly welcomed its response.
The move helped United shares stage a late rally to end up 2%, with the broader sector climbing 3% as investors bet on more summer booking numbers and a quick rebound in demand.
United joins alliance partners
Deutsche Lufthansa SA
and All Nippon Airways Ltd. in cutting domestic flying on top of shrinking international flights, with fellow Star Alliance member
Singapore Airlines Ltd.
also joining in broader cost-cutting initiatives.
Alliance members have antitrust immunity from regulators to coordinate flying and pricing in select markets. Such multi-airline deals have become less useful in recent years as carriers focused on bilateral agreements, but their worth has unexpectedly risen in light of the coronavirus’s impact on travel.
Write to Doug Cameron at email@example.com
Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8