United Airlines CEO Scott Kirby said Wednesday that he expects air fares to drop as the pandemic continues to depress demand for flights.
“I guess prices will go down in the short term,” Kirby told CNBC’s “Squawk Box”. All the normal price metrics … in this pandemic are a little bit irrelevant. “
The airline lost more than $ 1.6 billion in the three months ending June and is now focused on reducing more than a third of its daily cash burn rate from $ 40 million in the second quarter to $ 25 million in the third trimester.
“The most important metric is burning cash,” he said.
The pandemic and travel restrictions designed to prevent it from spreading have devastated the demand for air travel. United has been cautious about adding flights and said it could reduce capacity even further, depending on future demand.
Kirby said demand appears to have bottomed after falling in recent weeks, but that revenue could stabilize at 50% of 2019 levels, until a vaccine is widely available for Covid-19. United’s revenue fell more than 87% in the second quarter from a year earlier.
United said Tuesday it expects to have $ 18 billion in liquidity after raising more than $ 16 billion since the start of the crisis through the sale of debt and shares, as well as federal aid.
The airlines received $ 25 billion in federal payroll support that prohibits them from cutting jobs until September 30, but the airlines are warning workers of possible cuts when the terms of the aid expire. United told 36,000 workers on July 9 that their jobs are at risk. The airline and other airlines are urging employees to take purchase packages. United said Tuesday that about 6,000 have volunteered so far.
When asked if more federal aid is needed, Kirby said: “I am sure we can overcome the crisis without more funds, but it will also have an impact on employment.”
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