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United Airlines says well-placed for post-pandemic growth as rivals shed big planes from fleets

(Reuters) - United Airlines said on Thursday it expects to be a big winner of post-pandemic international travel as other airlines retire large planes or retreat from long-haul markets.

Chicago-based United was the largest U.S. operator of international flights before the pandemic that has thwarted global travel and led many countries to restrict entry.

It is among U.S. airlines actively lobbying the new U.S. administration to reopen borders for people who test negative for COVID-19 before travel or have been vaccinated.

U.S. President Joe Biden has indicated he plans to maintain a ban on most travelers from Europe and Brazil and require a quarantine for all international air passengers upon U.S. arrival, but moved swiftly on Thursday to address the COVID-19 pandemic with steps to expand testing and vaccinations and increase mask-wearing.

Those measures are considered key to fighting the pandemic and restoring confidence in air travel.

When wider international travel does return, airlines and passengers will face a changed a market, likely with fewer flight options.

“There are simply fewer widebody aircraft in the fleets around the world. There’s, in particular, fewer of the very large ones with the very large business-class cabins,” Chief Commercial Officer Andrew Nocella told analysts on a conference call on Thursday, a day after United posted quarterly results.

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That will benefit United, which has been revamping its business-class product and kept its fleet largely intact.

Long-haul widebody jets like the Boeing 747 and Airbus A380 are among those that airlines in Europe and elsewhere are trimming from their fleets.

And last week, Norwegian Air said it will end its transatlantic flights that less than a decade ago challenged long-established rivals and seek government help.

U.S. airlines have received $40 billion in federal payroll aid, much of that in the form of grants that do not have to be repaid, under two separate COVID-19 relief packages, and a separate $25 billion in low-interest government loans.

In the last travel cycle, profit margins for U.S. domestic travel outperformed international margins. But post-COVID-19, United said it expects international travel to generate more profit as demand outstrips supply.

For now, U.S. travel demand has stalled at around 30% to 40% of 2019 levels and airlines say it will not increase significantly until vaccines are widely distributed.

But once demand snaps back, United Chief Executive Scott Kirby said it could quickly climb to 85% or 90% of 2019 levels, which was a record year for U.S. airlines.

United posted a deep quarterly loss on Wednesday due to the pandemic but said it expects profit margins in 2023 to exceed 2019 level thanks to a cost-cutting drive.

Reporting by Tracy Rucinski in Chicago; Additional reporting by Sanjana Shivdas and Ilona Wissenbach; Editing by Nick Zieminski and Matthew Lewis

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