United Airlines CEO Scott Kirby said he thinks business travel ultimately will return to pre-COVID-19 levels, but he doesn’t expect that to happen anytime soon — and certainly not before there is a vaccine.
Kirby, speaking Wednesday morning on CNBC’s “Squawk Box,” said this scenario will have an “impact on employment.”
United is one of the 10 largest employers in New Jersey.
“We are going to have to reduce the size of the airline, and it is going to be until there is a widely available vaccine and, because of that, we are going to have to reduce employment,” he said. “So, I am confident that we can make it through the crisis without any more funding, but it is also going to have an impact on employment.”
Kirby said demand in July — when COVID-19 cases have picked up dramatically around the country — is less than it was in June. This has resulted in historically low ticket prices, but he feels demand will gradually return by the end of the year.
Kirby said he is more concerned about revenue numbers — and feels they are tied to a potential vaccine.
“We really focus a lot more on revenue, because that is the best measure of demand and, unfortunately, it is down … at the moment to 83%,” he said. “We think there will be a gradual recovery in that, but we don’t expect to get anywhere close to normal until there is a vaccine that has been widely distributed to a large part of the population.
“Our guess is that revenue will get to about 50% of what it was in 2019 in a pre-vaccine world. Once we get past a vaccine and it is widely distributed, we will quickly recover toward 100%, but our guess is we are going to plateau at 50% until we get to a vaccine.”
Long-term, Kirby said he is confident business travel will return — saying there is no replacing face-to-face meetings.
“We went through this 20 years ago, when video conferencing first started and everyone thought it was going to decimate business travel — and it did exactly the opposite,” he said. “If anything, it helped grow business travel, because we need to be there in person.
“My guess is that it will take time, it won’t happen immediately, but the first time a business loses a corporate account to a sales team that took a team to dinner instead of doing a Zoom call, they will be back on the road.”