Airlines are reducing their flights, freezing contracts and keeping their planes on the ground to cope with the significant decline in travel reservations and an increase in cancellations caused by fears of the new coronavirus outbreak.
Gary Kelly, CEO of Southwest Airlines said the outbreak could be worse for airlines than the terrorist attacks of 2001. An industry commercial group believes it will cause more damage.
Delta Air Lines said Tuesday that travel demand has fallen so much in the last week that it expects a third of seats to be empty this month on flights within the United States, which stayed away from the impact of the virus for a while.
United Airlines anticipates first-quarter losses for the first time in six years. The airline said sales of tickets in the United States have decreased by 25% in recent days, 70% after taking into account cancellations, and the situation in Asia and Europe is even worse.
Business trips have been suspended because meetings and conferences were canceled. Meanwhile, pleasure travelers are afraid.
In general, airlines try to attract reluctant travelers by reducing costs, but that won’t work with the Covid-19 outbreak.
“If you’re afraid of flying, you probably have it at any cost,” said Glen Hauenstein, president of Delta.
Delta, the world’s largest airline by revenue, said net reservations fell from 25 to 30% in the last two weeks and the situation could get worse. The company will reduce its international flights between 20 and 25% and reduce travel within the United States between 10 and 15%, practically matching the cuts announced by United Airlines.
Delta parked some airplanes, reduced expenses, froze contracts, offered a voluntary license without pay, postponed voluntary retirement contributions and suspended the repurchase of shares.
American Airlines announced a 10% reduction in its international flights this summer and will decrease travel in the United States by 7.5% during April. The training of new pilots and flight personnel broke down.
United had an additional bank loan of $ 2,000 million to obtain a financial respite. The worst scenario that the company proposed is a 70% drop in profits in April and May, reducing to 20% in December.
Airline President Scott Kirby said United hopes the outbreak will not be as harmful as the attacks of September 11, 2001, when reservations sank 40% for two months before starting to recover.
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