United Airlines reveals a 70% decline in domestic net bookings due to the Coronavirus emergency

In its announcement on Tuesday, United Airlines (NASDAQ: UAL) announced a massive 70% decline in the domestic demand of its flights in the past few days. The company also said that with the Coronavirus emergency weighing heavily on the global travel industry at large, United Airlines remains open for further flight cancelations in the upcoming weeks.

United Airlines’ president, Scott Kirby said on Tuesday that the company’s net bookings (new reservations – cancelations) are dropping sharply not only in Asia but also in Europe. Kirby is expected to take over the position of the airline’s new CEO as Oscar Munoz steps down in May.

United Airlines Prints A 25% Decline In Gross Bookings

A 70% decline in domestic net bookings, however, came out significantly higher than a 25% drop in gross bookings. At the webcast of the J.P. Morgan Industrials Conference (due to Coronavirus), the president reiterated that the gross bookings is more suitable and a reliable measure to get an insight into the current demand.

While multiple airlines have estimated the health emergency to take a toll on the financial performance, Kirby’s forecast came out the grimmest so far. The global airlines are now working committedly towards preserving liquidity and cutting costs with the majority of them expecting trends to get worse in the upcoming months.

Kirby, however, was not all pessimistic in his address on Tuesday. At the conference, the president reiterated that airlines in the United States have strong balance sheets. Combined with multiple revenue streams, the U.S airlines are capable of standing the Coronavirus driven challenges. United Airlines was reported trading 12% higher on Tuesday afternoon at $52.35 per share, despite the Coronavirus concerns.

United To Cut 20% Of Its Originally Scheduled Flights In May

United’s flights in May are expected to see a 20% cut as compared to the original schedule. According to Kirby, “the company foresees cuts each month after that to be at least as large or larger until we see concrete signs of returning demand.”

In an announcement last week, United Airlines had declared an imminent 10% cut in its domestic flights while a 20% reduction in international seat capacity was expected. In terms of revenue in April and May, United forecasts a 70% drop. In the worst-case scenario, another 60% decline in revenue is also likely in June.

United’s president also accentuated that the airline plans on cutting its 2020’s scheduled capital expenditures by around 35% to $4.5 billion.