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United Sees Domestic, Transatlantic Business Rebound

By Michael B. Baker / October 20, 2021 / Contact Reporter
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Corporate bookings at United Airlines are "moving in the right direction," with both domestic and transatlantic business travel showing signs of recovery in recent weeks, United CEO Scott Kirby said Wednesday during the carrier's third-quarter earnings call.

"The effects of the delta [Covid-19] variant on our business was substantial, however we expect the worst of this wave is now past," United chief commercial officer Andrew Nocella said. "In the last two weeks, we've seen several leading business indicators return to where we were in July or better."

Among those indicators, domestic business travel demand has rebounded to the levels seen before the emergence of the delta variant, with business travel demand from United's largest corporate accounts increasing at a rate similar to its smallest accounts, he said. Demand has been particularly strong from consulting companies but has been rebounding "across the board" in United's business sectors, according to Nocella. 

Overall, domestic business travel is nearing the 50 percent market compared with pre-pandemic levels, Nocella said. Delta Air Lines reported a similar rate of rebound last week.

"We have not recovered fully on business traffic and have a long way to go," he said. "Just looking at the trends of only the last few days, our level of being bullish about this has increased a lot. The numbers for the delta variant caused things to go down quickly, and now that we're past the delta variant, it appears they're going to go up hopefully just as quickly."

With the reopening of U.S. borders to vaccinated European travelers a month away, "business traffic across the Atlantic is now tracking consistent with or slightly better than domestic business traffic," he added.

The return-to-office plans for United's corporate customers remains a "hodgepodge," with "people in general more and more returning to their office environment," Nocella said. United expects business travel to accelerate next year with "a lot of pent-up demand," he said.

United reported $6.6 billion in passenger revenue for the quarter, down 36.7 percent compared with the third quarter of 2019. Domestic passenger revenue made up $4.8 billion of that total, with transatlantic routes contributing $840 million in revenues, Latin America routes contributing $743 million and transpacific routes contributing $209 million.

Total revenue for the quarter was $7.8 billion, down 31.9 percent compared with 2019. Cargo revenue was up 84 percent across the same period.

As the rebound continues, Kirby said United's early action with vaccine mandates would benefit the carrier as it would give travelers a reason to "book with confidence" with United. To date, 99.7 percent of the carrier's employees opted to get vaccinated, president Brett Hart said.

Kirby said that airlines not pursuing mandates, instead letting employees request exemptions and do regular testing for Covid-19, could find themselves facing operational challenges.

"They're likely to have tens of thousands of employees that need to be tested every week," Kirby. "People will forget to do their test, do it wrong, don't get it done or test positive. If you think weather in one state can lead to a meltdown, imagine if you have thousands of employees calling in on one day and saying their test didn't pass. This is in the rear-view mirror for United."

United reported net income of $473 million for the third quarter, which included benefits of federal payroll aid. Adjusted for that and other special items, United's net loss for the quarter was $329 million, compared with an adjusted net loss of $2.4 billion in the third quarter of 2020.

RELATED: United Q2 earnings

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