Airline industry could shrink by 50% according to United Airlines Chairman

Let’s talk about the uh the unprecedented crisis facing the travel industry what message do you have to americans who are scared to get on a plane right now how do you restore the confidence that took decades to build we are not promoting flying we are not suggesting you fly but we know that people indeed have to fly and so our job is to assure and ensure the facilities that you walk into the aircraft that you’re on are as safe as possible people do want to fly there’s a large demand but this economic crisis has also impacted that right i mean it’s there’s less people that can and will because i know unemployment and the economic sort of downfall i mean in the second quarter we were burning 40 million dollars a day in cash and that will hopefully improve over time but you know we used to make a decent amount of money for an airline just a few months ago and so it’s been tragic it’s been tragic on all on all those fronts but what we tell our employees that we are going to be a smaller airline for some time a number of airlines have started to notify employees that they could face involuntary layoffs after the september 30th prohibition on job cuts that were laid out by the carers act how many total industry jobs do you expect will be eliminated through involuntary layoffs and how many are going to be eliminated through voluntary separation packages i think what every airline that i know is doing everything they can to as much as possible avoid that unnecessarily uh involuntary furloughs but the numbers are going to be large i mean the size of the industry is going to be 30 40 maybe 50 lower for some time and to some degree that that that percentage will be the number of people that are reduced because it’s a it’s a high fixed cost you know sort of industry and and in order to survive we have to work through that and then hopefully things begin to cover and we can bring everyone back but you said that the industry will have to be 30 to 50 percent smaller and thus the workforce will have to be 30 to 50 smaller is that right well the payroll will have to be to be specific a little nuance there and i think a lot of us are working ways of working in ways where um is a simple example and this is that’s all it is a job share program where you and i would share this job and there’s there’s one salary versus two for a period of time so the payroll costs will have to be down so it’s not necessarily those people and again everybody is approaching that in different ways do you think all the non-regional us airlines will survive as independent carriers or do you think that this crisis is going to cause another round of consolidation i think the stark reality of what we’re facing um is dire you’ve seen already around the world uh several airlines began to in essence fold um i suspect you may see more the longer this thing goes you know if this were to stretch in order amount of time all of us would be affected to some degree and it would cause uh all the things that you just mentioned but at this point in time i think many of the majors have have gotten enough liquidity that we we can withstand for a period of time certainly for the next year