The US airline industry may have to shrink by up to half to survive the current Covid-19 crisis, says United Airlines Executive Chairman and former CEO.
"The stark reality of what we’re facing is dire," Oscar Munoz told CNN Business.
Labor costs are a massive drain on the industry and the current federal payroll assistance is only delaying the inevitable.
Munoz thinks staff numbers may need to be reduced by 30-50%.
"This industry has gone through hell and back on repeated occasions. This is, by far, in order of magnitude, larger than anything we’ve ever seen."
The wage bill of the nine publicly traded US airlines was more than $50 billion in 2019.
United Airlines has warned that it could lay off 36,000 employees while American Airlines has said 19,000 jobs will be cut without further payroll assistance.
Munoz believes the market will also be smaller in terms of the number of airlines.
"You’ve seen some airlines, in essence, fold. I suspect you may see more the longer this thing goes on. If this would stretch an inordinate amount of time, all of us would be affected to some degree," he said.
Business travel demand won’t ultimately recover until there is a Covid-19 vaccine, Munoz says.
"Confidence in the health aspect is going to bring back conferences, bring back corporate travel. It’s going to bring back across-the-pond travel for lawyers and bankers and consultants."
Written by Ray Montgomery, US editor
