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United Airlines Warns of 75% Fewer Flights in July, 65% in August

By Rich Smith – Jul 8, 2020 at 1:33PM

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Although air travel demand is improving, the ascent is anything but V-shaped.

As the COVID-19 pandemic continues to depress demand for air travel, United Airlines (UAL -0.72%) is losing $40 million due to a dearth of traffic, reports The Wall Street Journal this morning. The traffic situation is improving -- but only slowly.

In a pair of filings with the SEC last night, United advised that its "consolidated" capacity (that's the total number of seat-miles flown on domestic and international routes combined) in June 2020 was down 88% from June 2019. This month, that number is expected to improve to 75% down (i.e., the airline will fly 25% as many flights in July 2020 as it did a year ago), and capacity will improve further to a 65% decline in August.

United plane on tarmac.

Image source: United Airlines.

The company attributed the declines in capacity to "reduced [passenger] demand to destinations experiencing increases in COVID-19 cases and/or new quarantine requirements or other restrictions on travel." And while the steady improvement in the capacity numbers suggests that things are improving for United -- and for airlines in general -- the company also cautioned that it "expects demand to remain suppressed until a widely accepted treatment and/or vaccine for COVID-19 is available" and will therefore "proactively evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand."

In other words, those improvements expected this month and next are not set in stone.

In a related announcement, United informed the SEC that it is "WARN-ing" workers (under the federal Worker Adjustment and Retraining Notification regulation) that they might be subject to "involuntary furlough" if demand for air travel does not improve as anticipated. The WARN notice means that up to 36,000 United employees could lose their jobs as early as Oct. 1.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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