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United Execs See Business Travel Rebound Strengthening

The airline says it expects to return to profitability in third quarter of 2021, with “full recovery in demand anticipated by 2023”

July 22, 2021

Over 90 percent of business travelers are planning to return to travel in the second half of this year, according to Andrew Nocella, chief commercial officer for United Airlines.

Speaking on a second quarter earnings call, Nocella said business travel demand, including international travel, is expected to improve and be down about 40 percent to 45 percent versus 2019 by the end of the third quarter.

That’s an improvement over the current levels of business travel, which is now down 60 percent compared with pre-pandemic levels after an “inflection point” in June. Nocella said the carrier expects to see two more inflection points in business demand – one at the end of the summer and one in January.

The strengthening business travel picture is contributing to the airline’s upbeat forecast for the third and fourth quarter of 2021. Despite posting a Q2 net loss of $434 million, airline executives told analysts that performance over the period “largely exceeded original expectations as international long haul and business travel accelerated even faster than anticipated, together with continued yield improvement.”

The brighter yield picture is reflected in the airline’s changing fleet strategy. At the beginning of July, the carrier announced its order of 270 new aircraft, a move which is expected to increase the total seat capacity per domestic departure by a third over the next five years. The new aircraft also promises significantly lower carbon emissions per seat.

The carrier is now projecting “positive adjusted pre-tax income” for the second half of the year. Looking out further, the airline expects to see “continued gains as more businesses return by end of summer and into 2022, with a full recovery in demand anticipated by 2023.”

The airline’s CEO, Scott Kirby, said the airline has not seen any impact at all on bookings as a result of the COVID-19 delta variant, with bookings continuing to get stronger every week. Kirby predicted the most likely outcome is that recovery in demand will continue largely unabated.

As of the end of June, Kirby added that 84 percent of MileagePlus members said they were fully vaccinated.