United Airlines, JetBlue slash flights and spending due to virus

The US airlines say they are responding to the drop in demand as the coronavirus outbreak hits the travel industry.

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As conferences around the world are cancelled and people delay travel plans, US airlines have frozen hiring and reduced flights [File: Kham/Reuters]

United Airlines Holdings Inc and JetBlue Airways Corp are cutting flights and implementing cost controls in the most drastic actions by United States-based airlines to get ahead of depressed travel demand due to the spreading coronavirus.

The United measures, announced by executives in a letter to employees on Wednesday, include a 10-percent reduction in US and Canadian flights and a 20-percent reduction in international flying in the month of April, with similar cuts planned in May.

JetBlue said in a memo Wednesday seen by Reuters news agency that it was cutting capacity by approximately 5 percent “in the near term to address the fall in demand” as a result of the coronavirus and said it assessing if more cuts are needed.

JetBlue is taking other steps “aimed at preserving cash” including “delaying or cancelling upcoming events and meetings” and “reducing hiring for front line and support centre positions.” It is also considering voluntary time-off programmes and is “limiting non-essential spending.”

United is freezing new hiring except for critical roles, delaying 2019 merit salary increases for management and administrative employees and offering all US-based workers the option of a voluntary unpaid leave of absence.

“We sincerely hope that these latest measures are enough but the dynamic nature of this outbreak requires us to be nimble and flexible moving forward in how we respond,” United CEO Oscar Munoz and President Scott Kirby said in the letter.

The coronavirus emerged in the central Chinese city of Wuhan late last year and has spread globally with more than 94,000 cases and 3,220 deaths, according to a Reuters tally.

Conferences and gatherings around the world have been cancelled, and companies have changed work and travel plans. Plane maker Boeing Co itself on Wednesday said it was taking precautions including restricting travel to essential trips.

Chicago-based United’s announcement followed a meeting of US President Donald Trump and the heads of the largest US airlines at the White House where they discussed the effect of the virus on the industry and demand.

Concerns over the effect of reduced travel demand on airlines have hit airline shares and stoked fears of a financial bailout for the sector, an idea that the head of the US Chamber of Commerce on Wednesday moved quickly to dismiss.

Trump also said on Wednesday that the airline executives had not asked for a bailout. After emerging from bankruptcy in the last 10 years and with new business models that include fees for everything from baggage to boarding, the main US airline companies are in a better financial position to weather a crisis, analysts have said.

Unchartered territory

The rapid, global spread of the virus has forced airlines to abandon their usual strategies for crisis management, which in the past have included lowering fares and redirecting flights to trouble-free areas.

Until now, United and other US carriers had only reduced flying to the areas most hit by coronavirus cases, though international rivals Cathay Pacific Airways Ltd and British Airways recently announced broader reductions.

Leaders of the unions representing United’s pilots and flight attendants called the move a “responsible approach” to addressing the effect of COVID-19 on air travel.

In one effort to win over hesitant travellers, US airlines have suspended rebooking fees for new ticket reservations.

Source: Reuters