Market Overview

United, Alaska Further Slash Domestic Capacity For April

United, Alaska Further Slash Domestic Capacity For April

Faced with continued reductions in U.S. passenger travel due to the COVID-19 pandemic, United Airlines Holdings, Inc. (NASDAQ: UAL) and Alaska Airlines Group, Inc. (NYSE: ALK) expect to start off April with an additional cut in its domestic cargo capacity.

United had previously reduced its domestic flights by 42% and will increase that to 52% for April, resulting in an overall capacity reduction of 68%.

Alaska said it will reduce its April and May flight schedule by about 70%, "following historic and unprecedented falloff in demand related to the COVID-19 outbreak across the U.S. and beyond."

"Flight schedules for June and beyond will be based on demand, but it is our expectation that reductions will be substantial for at least the next several months," the airline said. "As a result, Alaska – like other airlines – is seeing demand reductions of more than 80%."

With the exceptions of Mammoth Lakes and Stockton, California, United said it has not yet eliminated any domestic flight destinations. However, the airline warned that it is "closely monitoring government restrictions across the U.S. and will adjust our schedule accordingly."

The airline has also stepped up its use of truck capacity for domestic cargo transport.

United said it has already reduced international flights by 90% due various overseas COVID-19-related travel restrictions, which subsequently reduced its international cargo capacity.

The airline said it continues to fly six daily international operations across Asia, Australia, Latin America, the Middle East and Europe, which offers cargo capacity to shippers.

"We have secured additional capacity on selected routes worldwide through our own aircraft and our interline partners," United said in a press release.

On Wednesday, United suspended handling pet shipments and human remains on domestic flights, after suspending those services for international flights last week. Since Friday, United has also suspended performance guarantees for all cargo deliveries.

In related news, American Airlines Group Inc. (NASDAQ: AAL) notified investors that it has borrowed $1 billion from a new line of credit to help maintain operations during the coronavirus crisis.

Alaska also announced on Wednesday that it drew down $400 million on its line of credit and closed an additional secured loan for $425 million. The Seattle-based airline is also reducing executive and employee compensation during the COVID-19 crisis. 

"We are aggressively managing all spending, including all spending for aircraft, buildings, equipment, leases, services and other areas," Alaska said.

Photo Credit: Flickr/Aero Icarus


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Posted-In: Airliners Coronavirus Covid-19 FreightwavesNews Markets

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