United Airlines said the 2,700 corporate jobs it has cut since the coronavirus pandemic began likely won’t return, even as CEO Scott Kirby said the airline is starting to see the “light at the end of the tunnel.”
“The next 12 to 15 months are still going to be difficult and the recovery will not be a straight line. But we’ve done what we believe it takes to get through,” Kirby said during a call with analysts discussing the company’s third-quarter results. “We can see the recovery on the horizon and our attention can now be firmly focused there.”
Still, United executives said they continue to believe demand for air travel will plateau at around half of last year’s levels until a vaccine is widely available. Even when that happens, white-collar jobs that were cut as the airline worked to slash costs may not return, the airline said.
United said last month it would lay off 1‚400 management and administrative employees, after 1,300 left voluntarily earlier this year.
“These reductions are expected to be largely permanent, even as demand recovers,” the Chicago-based airline said Wednesday, while announcing its third-quarter earnings.
That’s fewer than the 3,400 white-collar jobs United warned it could eliminate in May. Still, the airline has cut about 23% of the roughly 11,500 management and administrative employees the airline said it had at the time, many working in Chicago, home to the company’s Willis Tower headquarters.
Overall, United said it has cut about 22,000 of the 96,000 employees it had at the end of last year through a combination of voluntary leave and early retirement programs and furloughs. About 13,000 employees were furloughed and could be called back as demand for travel returns.
United reported a third-quarter loss of $1.84 billion and said revenue from passengers was down 87% compared with the same period last year. The airline expects its capacity during the fourth quarter of this year to be down about 55% from 2019, and the first quarter of 2021 could look similar.
More flights will be to leisure-oriented destinations like those in the Caribbean or Hawaii, since the airline expects business travel to take even longer to recover.
Executives said corporate travel may not rebound until 2024. Demand for business travel is still down 85 to 90%, though small corporations are returning faster than larger companies, said chief commercial officer Andrew Nocella.
Many companies have rolled back policies banning travel, though it may still be more cumbersome than before. Still, even those willing to travel won’t have a reason to until the people they would visit are back at the office.
“There needs to be a reason to travel,” Nocella said.
United executives said they are confident business travelers will eventually return.
“The first time someone loses a sale to a competitor who showed up in person is the last time they try to make a sales call on Zoom,” Kirby said.
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