The outlook for the airline industry looks cloudy — at best — until there is a COVID-19 vaccine. In fact, United Airlines' chief said revenues are not expected to rise above half of 2019 levels before then.
"We don't expect to get anywhere close to normal until there's a vaccine that's been widely distributed to a large portion of the population," United Airlines CEO Scott Kirby said on CNBC's Squawk Box on Wednesday (July 22).
One of the biggest challenges facing airlines is regaining consumer confidence. A PYMNTS survey of 8,000 U.S. consumers showed a high level of fear, with many pinning a vaccine as a requirement before returning to their normal activities.
But, Kirby noted, once the vaccine comes, we could see those consumers quickly jumping back into their normal, pre-COVID routines.
"Once we get past a vaccine and it's widely distributed we'll quickly recover back towards 100 percent," he said.
As a way to jumpstart transatlantic travel, several major airline companies are urging the U.S. and European Union to begin a joint coronavirus testing program.
The CEOs of United Airlines, American Airlines, IAG and Lufthansa Group said that revived air travel between the U.S. and Europe would aid the world’s economy in the wake of COVID-19’s devastation.
A new testing program “could be an excellent opportunity for government and industry to work together,” they said, in a letter to U.S. Vice President Mike Pence and European Commissioner for Home Affairs Ylva Johansson.
For his part, Kirby told CNBC that he expects airfares to come down due to the pandemic and travel restrictions.
“My guess is that pricing is going to go lower for the short term,” Kirby said. “All of the normal pricing metrics ... in this pandemic are a little bit irrelevant.”
United lost more than $1.6 billion in the second quarter of 2020, ending June 30. Incredibly, the same period the previous year yielded the company a profit of $1 billion.
“The most important metric is cash burn,” Kirby said. The company said it has raised more than $16 billion since the start of the crisis by taking on debt, selling stock and getting federal aid.
As trials for a vaccine crawl forward, companies such as Gilead Science are coming up with treatments. That life sciences company is offering up an experimental drug called remdesivir.