Kirby Optimistic About United’s Future
April 9, 2021
Scott Kirby currently opines that United Airlines international and business travel will make a “full” recovery from the decimation caused by the COVID-19 Pandemic toward the end of 2021. This is a bold prediction and not one that is necessarily shared by everyone in the industry. For perspective, Kirby tempers his statement by explaining that international travel will face steeper logistical hurdles for recovery. Vaccination records may be a requirement, especially to Asian and European destinations. China would likely be the last travel destination to ease restrictions, Kirby said.
This is a markedly more optimistic outlook than Kirby predicted last Fall and Winter (think involuntary furloughs) when he was saying corporate travel wouldn’t return to normal until 2024. During the pandemic, Kirby has gained a reputation as the airline CEO with the most conservative approach to managing the pandemic. His approach to immediately and drastically reduce costs one year ago, has been largely credited with keeping our airline stable as we weathered the pandemic. While we don’t always agree with every decision he’s made (for example, the aggressiveness of the recent Flight Attendant furloughs), most would agree he has been a responsible steward of our airline through this past year.
Many agree that the return of business flyers is key to the future health of United. The increase of domestic leisure travel has gotten many planes flying again and allowed United to reduce its “core” cash burn to zero (United defines “core cash flow” to be cash generated from operations minus investment and financing expenses). However, a return to profitability, and profit sharing, will come when the companies that pay top dollar for last-minute plane tickets, book amenity-rich hotels, and reserve conference rooms, get their staff back out on the road. Kirby insists, unlike others in the industry, because business travel is about building relationships, it will make a total recovery. A significant number of analysts disagree and think business travel will be forever changed by COVID and remain permanently more remote. Time will tell.
While we would love to fully embrace this theory of full business recovery by the end of 2021, it’s our view that a caution optimism is warranted. Of course, all Flight Attendants are anxiously awaiting the return of our international flying and our business passengers, and we remain hopeful that vaccines widely distributed around the world will help make this a reality. As of today, it is not yet a certainty. Vaccine production is still largely happening only in wealthier countries and the COVID variants are still causing great havoc in Europe and elsewhere. Governments and business around the world need to come together to help the entire world get vaccinated and this has not yet been accomplished nor is their certainty that this will happen this year.
Conversely to Kirby’s glass mostly full perspective, there are other industry leaders who do not share his prediction. While the Airlines for America CEO is pleased things are looking up at the airlines, Nick Calio suggests that the finish line isn’t in sight yet. “It’s an elusive combination of factors that need to align”, Calio says. Airlines for America argues it will take more than an efficient vaccination rollout to get passenger numbers back to 2019 levels. COVID case numbers need to continue to decline. Travel restrictions, including border closures and quarantine regimes, will have to ease. There will need to be a general economic rebound across the United States. Travel markets will have to bounce back, including the all-important corporate travel market. Right now, most pundits expect the corporate travel market to be among the last market segments to recover.
Let us all hope that Kirby’s prediction proves accurate and our business travelers are back in economy plus receiving their complimentary snacks and drinks, but that’s not yet a certainty for this year. Kirby has largely predicted and navigated our airline’s best path forward thus far, and we have faith that he will continue to see us through to the finish line.