United Airlines slashes 95% of international airline traffic

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I wrote earlier about the hotel industry struggling mightily and how half of the US hotels might close if things continue at the rate they are going at. Leaders in the hotel industry have stated that this problem is much worse than post 9/11 and the 2008 economic crisis combined. Things really are that bad.

As for airlines, things have also been very bad.

Southwest has decided to temporarily cancel all of their international flights and to reduce their total daily flights by 1,000. Both Delta and American Airlines have also made significant cuts through their overall traffic (American Airlines reduced its international flights by 75% earlier this week).

But we just heard the news of yet another historical-level cut in the airline industry. United Airlines is reducing its international flight schedule by 95% in April.

It’s pretty clear that April is going to be an absolutely brutal month for the airlines and hotels but I believe things could start to look up by the end of the month if we see transmission rates beginning to decline by then (i.e, the social distancing works).

If that growth rate continues to accelerate through April, though, the travel industry is going to be brought to its knees in my opinion and bailouts will be necessary across the board to avoid mass bankruptcy. 

As for bailouts, we should learn more about those soon and see if those could put our airlines and hotels in a more certain state for the time being. The big thing now is what restrictions need to be put on the bailouts.

For example, legislators want to prioritize workers and limit executive bonuses and other things like stock buybacks.

Al Jazeera states

Stock buybacks are heavily criticised because they do nothing to boost productivity and effectively serve as stealth dividends that enrich shareholders and the pay packages of executives who are compensated in part by stock. 

At this point, it would not completely surprise me for some airlines to shut down for a short time during April. Hopefully that doesn’t happen but if domestic travel shuts down then things will get interesting. 

H/T: USA Today

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