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COVID-19

United, weighed down by losses, aims to nimbly navigate COVID storm

Andy Uhler Jan 21, 2021
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A closed United Airlines kiosk at San Francisco International in July. The carrier and its industry have been piling up losses. Justin Sullivan/Getty Images
COVID-19

United, weighed down by losses, aims to nimbly navigate COVID storm

Andy Uhler Jan 21, 2021
Heard on:
A closed United Airlines kiosk at San Francisco International in July. The carrier and its industry have been piling up losses. Justin Sullivan/Getty Images
HTML EMBED:
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United Airlines reported a net loss of $1.9 billion for the fourth quarter — and $7.1 billion for all of 2020. 

The company’s CEO, Scott Kirby (whom Marketplace spoke with in December), said before the earnings call Thursday morning that “aggressively managing the challenges of 2020 depended on our innovation and fast-paced decision-making.” 

United said it expects total operating revenue in the first quarter of this year to be down 65% to 70% from the same time two years ago. Which means the airline has to make a number of short-term decisions now to stay afloat. United’s trying to be as nimble as it can, but industry consultant Michael Boyd said that’s not saying much when discussing airlines.

“That means that you’re moving the transom of the Titanic a little quicker than somebody else,” he said.

The biggest challenge for the whole industry is to cut losses quickly.

“The idea being, we’ll try something, but if it doesn’t work, we get the hell out and try something different,” Boyd said.

Nobody really knows when demand for flights will return to what it was before the pandemic, or if it ever will. Some are hopeful we’ll return to 2019 levels later this year. Others say 2023 or 2024 are more realistic forecasts. 

“You can think of this as a game of survival,” said Samuel Engel, aviation consultant at ICF. He said when the industry has seen downturns in the past, two things have been consistently true. 

“One, when travel demand returns after a slump, it returns faster than people think,” he said. “And the other thing is that periods of capacity reduction in the industry lead to greater profitability for the survivors.”

United said it’s looking to permanently slash $2 billion from its annual expenses, which could mean fewer planes and personnel.

But what worries Henry Harteveldt, travel industry analyst at Atmosphere Research Group, is that major airlines could make decisions without the passenger in mind. 

“Will they invest in the products and services that the passengers like and will pay for? Or cram more seats onto their planes?” he asked. “Will they strip away the things that distinguish them from budget airlines?”

COVID-19 Economy FAQs

What’s the outlook for vaccine supply?

Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.

How has the pandemic changed scientific research?

Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.

What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?

Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”

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