United warns of cash bleed, empty planes even after more schedule cuts

(Reuters) - United Airlines Holdings booked $1.5 billion less revenue in March than the same time last year and warned employees that planes could be flying nearly empty into the summer, even after drastic flight capacity cuts.

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“This crisis is moving really quickly,” United Chief Executive Oscar Munoz and President Scott Kirby said in a memo to employees on Sunday.

United is cutting corporate officers’ salaries by 50% and reducing flight capacity by about 50% in April and May, with deep capacity cuts also expected into the summer travel period.

“Even with those cuts, we’re expecting load factors to drop into the 20-30% range - and that’s if things don’t get worse,” the executives said.

The airline said it was working night and day to keep as much pay as possible flowing to employees, even if the situation worsens and “demand temporarily plummets to zero.”

United, American Airlines Group and Delta Air Lines - the three largest U.S. airlines - confirmed Friday they are in talks with the U.S. government about potential assistance amid a dramatic drop-off in air travel demand due to the coronavirus outbreak.

The White House and lawmakers view the situation with increasing alarm, with an administration official saying on Saturday they want Congress to provide assistance to airlines and other industries badly harmed by the travel demand collapse.

So far there has been no talk of a full bailout like that of the auto-industry in 2009.

While no specific proposal is currently being written, a senior House Transportation and Infrastructure Committee aide said it backs tax relief talks but Republicans are “considering federal loans for the purchase of jet fuel, and possibly other operational expenses.”

Delta and American have also announced drastic schedule reductions following expanded White House travel restrictions on Europe to include United Kingdom and Ireland, leaving only a handful of daily flights to Europe.

Delta, the second-largest U.S. airline, will be flying just five flights a day to Europe starting this week, compared with 92 last year to 31 European destinations at the peak travel season.

Delta Chief Executive Ed Bastian said in a memo to employees Friday the “speed of the demand fall-off is unlike anything we’ve seen... We are moving quickly to preserve cash and protect our company. And with revenues dropping, we must be focused on taking costs out of our business.”

American said Saturday it would cancel 75% of its international flights and ground nearly all its widebody jets.

American, which previously operated 37 flights a day to Europe from the United States, will within about a week fly just two flights a day to Europe – one flight a day to London from Miami and Dallas.

Reporting by David Shepardson and Tracy Rucinski; Editing by Nick Zieminski and Christopher Cushing