United CEO says mask wearing will help demand, calls planes 'uniquely safe'

CHICAGO (Reuters) – United Airlines’ chief executive said on Wednesday that lessons learned about preventing the spread of COVID-19, including wearing masks, will underpin a recovery in travel demand and called airplanes “a uniquely safe environment.”

Chicago-based United (UAL.O) expects revenues, which fell 87% in the second quarter from a year ago, to recover over time to around 50% of 2019 levels and plateau there until a vaccine is widely distributed.

“To get back to that 50% level, I think we’re going to have to get people understanding that flying somewhere instead of getting in a car and driving for 13 hours, you’re safer actually flying. And I very, very much believe that to be the case,” CEO Scott Kirby told investors.

Airlines say hospital-grade air filtration systems coupled with face masks and better cleaning make air travel safe, despite the coronavirus pandemic that has crushed demand.

United is expanding its mask policy to all of its airport areas across the world starting on July 24 and will ban passengers from flying if they do not comply.

Kirby believes the airline can reduce its daily cash burn, which reached $40 million in the second quarter, to between $15 million and $20 million in the fourth quarter, but halting it all together will depend on demand — which he said saw its deepest drop in history in the June quarter — slowing to a 50% decline.

He said optimism about a recovery near the end of the quarter faded as U.S. COVID-19 cases began surging again, forcing some states to scale back reopening plans.

United flew only a fraction of its normal capacity in the second quarter and expects to fly about 35% of its normal schedule through September.

It sees passenger revenues down by about 83% in the third quarter, versus a 93.5% decline in the second. Before the COVID resurgence, it expected third-quarter revenues to fall less than 80%.

In terms of international passenger revenue, which analyst expect to rebound more slowly and to which United is more exposed than large U.S. peers, the airline believes the worst decline has passed and sees the potential for a quick recovery of its international routes, noting pockets of demand.

United President Brett Hart said there are “productive discussions” on U.S. and European airlines’ request for a joint U.S.-EU COVID-19 testing program to again allow people to travel between the United States and Europe.

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