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United Airlines Pulls Asia Service Because of Sparse Demand

By Lou Whiteman - Feb 28, 2020 at 10:33AM

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Coronavirus continues to impact international operations.

United Airlines Holdings (UAL -0.73%) is pulling down capacity to all of Asia, the latest sign of the deepening impact the coronavirus is having on global travel.

U.S. airlines, including United, in January suspended service to China due to the coronavirus, but United is now planning on decreasing flights to markets in Japan, Singapore, and South Korea as well. It is the most comprehensive pulldown by a U.S. airline in the region to date, though Delta Air Lines earlier in this week temporarily cut its number of flights to South Korea.

A United jet taxing to the runway.

Image source: United Airlines.

United gets about 10% of its revenue from Asia, the most among major U.S. airlines and second to only Hawaiian Holdings among all U.S. carriers. About 15% of United's capacity is tied to Asia, compared to 9% for Delta and 6% for American Airlines Group.

The airline also generates about 40% of revenue from international flights, highest among U.S. carriers.

It is becoming increasingly clear that coronavirus will have material impact on airline businesses, but it is still far from certain how much that impact will be or how long it will last. United on Monday withdrew its 2020 guidance due to the uncertainty, saying in a regulatory filing "we are currently seeing an approximately 100% decline in near-term demand to China and an approximately 75% decline in near-term demand on the rest of our trans-Pacific routes."

Shares of United traded down more than 2% on Friday morning, and are off more than 25% year to date.

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