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Friday, 24 July, 2020, 12 : 00 PM [IST]

Airfare may drop, cash burn to continue: CEO United Airlines

United Airilnes CEO Scott Kirby told CNBC on Wednesday he expects airfares to slip as the pandemic continues to depress demand for flights.
“My guess is that pricing is going to go lower for the short term,” Kirby said in a “Squawk Box” interview. “All of the normal pricing metrics ... in this pandemic are a little bit irrelevant.”'

The airline lost more than USD 1.6 billion in the three months ended in June and is now focused on shaving more than a third off its daily cash-burn rate from USD 40 million during the second quarter to USD 25 million in the third quarter.

“The most important metric is cash burn,” he said.

The pandemic and travel restrictions designed to stop it from spreading have devastated air travel demand. United has been cautious about adding flights and said it could pull back capacity even more, depending on future demand.

Kirby said demand has appeared to have bottomed after slipping in recent weeks, but that revenue could plateau at 50% of 2019 levels, until there’s a widely available vaccine for Covid-19. United’s revenue fell more than 87% in the second quarter from a year earlier.

United on Tuesday said it expects to have USD 18 billion in liquidity after raising more than USD 16 billion since the start of the crisis through debt and stock sales, as well as federal aid.

Airlines received USD 25 billion in federal payroll support that prohibits them from cutting jobs through Sept. 30, but airlines are warning workers about potential cuts when the aid terms expire. United told 36,000 workers on July 9 that their jobs are at risk. The airline and other carriers are urging employees to take buyout packages. United said Tuesday that some 6,000 have volunteered.

When asked whether more federal aid is needed Kirby said, “I’m confident we can get through the crisis without any more funding, but it’s also going to have an impact on employment.” (Source: CNBC)

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