Shares of United Airlines UAL have lost 57.2% compared with the industry’s 54.9% decline in the past month.
United Airlines, like most of its peers, has been hit hard by the sharp drop in air-travel demand due to the coronavirus outbreak, which eventually hampered its prospects.
Coronavirus-Caused Agony Arrests United Airlines’ Growth
Due to the coronavirus-induced tanking demand, United Airlines aims to cut international flights by 90% in April. Moreover, this Zacks Rank #3 (Hold) Chicago-based carrier aims to decrease the number of flights across the United States and Canada in excess of 40%. The capacity reductions are expected to extend into the summer travel period.
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United Airlines apart, other carriers like Delta Air Lines DAL, JetBlue Airways JBLU and American Airlines AAL trimmed capacity in the face of dwindling demand due to the global health hazard.
In fact, U.S.-based carriers are seeking federal financial assistance to cope with this unprecedented crisis. Management at United Airlines even cautioned against a huge number of layoffs if “sufficient” help is not available from the Fed by Mar 31.
Due to the coronavirus-led weak demand scenario, United Airlines expects March revenues to be down $1.5 billion from the reported figure in March 2019. In fact, the carrier anticipates the number of customers and revenues to decline sharply going forward.
To mitigate the impact of adversities, United Airlines is planning to reduce payroll expenses. To this end, the company will be slashing corporate officers' salaries. Moreover, the airline also adopted measures, such as freezing hiring (except for crucial roles to counteract the demand slump). Additionally, United Airlines withdrew its first-quarter 2020 and full-year projections.
Due to this coronavirus-induced ambiguity, Fitch Ratings downgraded its outlook for United Airlines to negative.
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