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United Airlines to Cut Domestic Capacity by 52% in April

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As coronavirus concerns intensify, United Airlines Holdings (UAL - Free Report) now plans to reduce domestic capacity by 52% in April compared with 42% it had originally anticipated. With this revision, the airline’s total scheduled capacity cut for April will be 68% including 90% international capacity reduction.

With dwindling air-travel demand in the wake of the coronavirus, the Chicago, IL-based airline is making significant efforts to stay afloat. To this end, the company has taken several cost-controlling measures, such as freezing hiring (except for crucial roles), delaying salary increases as well as giving employees the option to apply for unpaid leave of absence, voluntarily. The carrier is also trying to preserve cash by cutting down on capital expenditures and operating expenses. It has also suspended share buybacks.

The airline’s deep crisis can be gauged from its expectation of a $1.5-billion hit to March revenues with the carrier having transported more than one million fewer customers in just the first two weeks of March compared with the year-ago period. In fact, the company anticipates the number of customers and revenues to decline sharply going forward.

Shares of United Airlines have plunged 51.1% since the beginning of February due to this turmoil.


 

As the coronavirus pandemic worsens and the government-imposed travel bans increase, airlines across the globe are making some dramatic capacity cuts. For instance, Copa Holdings (CPA - Free Report) and Avianca Holdings (AVH - Free Report) have temporarily closed all passenger operations. Additionally, JetBlue Airways Corp. (JBLU - Free Report) will carry out a large number of flight cancelations this week and operate a schedule less than 50% of its normal. The airline expects to cut flights even more in the coming month.

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United Airlines carries a Zacks Rank #4 (Sell).

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