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United Accelerates Flight Cuts as Coronavirus Eats Into U.S., International Demand

By Lou Whiteman - Mar 4, 2020 at 3:27PM

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The airline will park some of its larger planes due to falling demand.

United Airlines Holdings (UAL 2.01%) on Wednesday said it intends to cut domestic and international flights, the most dramatic steps yet as the airline industry tries to cope with a drop in demand due to the COVID-19 coronavirus outbreak.

In a message to employees, United said it would cut international flying by 20% and domestic flights by 10% in April, and park some of its larger, less fuel efficient widebody planes. Further cuts could follow in May, the airline said, if warranted by demand. The cuts were first reported by CNBC.

A United airplane taxis toward the runway.

Image source: United Airlines Holdings.

The airline industry has been among the sectors hardest hit by the coronavirus epidemic, with United saying last week that near-term demand on trans-Pacific routes had fallen 75% due to the outbreak. In recent days, the disease has spread rapidly in new regions, including Italy and Korea, and the first cases in the United States were reported.

The virus is spreading at a time when many U.S. consumers are making summer vacation plans, and there is growing concern by investors that this coronavirus will stifle demand during the key spring break, Easter, and summer travel seasons. A number of prominent conferences have also been postponed or canceled, and many large companies are suspending non-essential business travel while things play out.

United's decision to cut its spring schedule would appear to confirm that those fears are justified. Delta Air Lines (NYSE: DAL) and American Airlines Group (NASDAQ: AAL) have also cut flights into impacted international markets, but so far have not announced broad domestic cutbacks.

Shares of United are down 34% year to date, with most of that collapse occurring in the last two weeks.

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