United Airlines Confident It’ll Hire Enough Pilots to Meet Summer Demand

Skift grip

The shortage of U.S. pilots could benefit United if other airlines are forced to cancel flights due to staffing shortages, CEO Scott Kirby said. The carrier is bracing for summer demand to set records.

Madhu Unnikrishnan

United Airlines has acknowledged that the shortage of American pilots is real and a problem that will not be solved for several years, but the carrier’s management believes that the problem will be more detrimental to small airlines than to the size of its airlines.

Not that United are immune. Regional Carriers operating under the United Express brand, mainly in small towns, have difficulty hiring pilots. This will affect United’s ability to expand its network to many small and mid-sized cities as regional airlines reduce their growth.

“The driver shortage is real,” United CEO Scott Kirby told investors on Thursday. “Most airlines won’t be able to meet their capacity plans because there just aren’t enough pilots, at least not for the next five years.”

United believes that US pilot training schools produce between 5,000 and 7,000 pilots a year. The airline industry is due to hire 13,000 pilots this year as it plans for post-pandemic growth, mostly to replace pilots who retired or took buyouts at the height of the pandemic. Although many airlines, like United itself, have established or partnered with pilot training academies, it will be years before these schools can produce enough fully trained pilots to meet the demand. To fly a commercial aircraft in the United States, pilots must 1,500 hours flight experience, a process that takes years and is expensive.

United plans to hire 200 drivers a month this year, and Kirby thinks there will be no problem doing so. Carriers love it, and Delta Airlinesand American Airlines, offer aspiring pilots a more lucrative career path, with the potential to fly larger planes, than small and medium-sized airlines, he said.

The pilot shortage could actually benefit United this summer, when travel demand is expected to be stronger than it was even in 2019. Supply – or the number of flights – will not match demand. , especially since smaller airlines are reducing service and reduce their capacity plans, Kirby said. Demand is so strong that United will be able to pass on all of its higher fuel cost. ” The domestic [revenue] the environment will be stronger than previously thought,” he said.

United are practically licking their chops in anticipation of this summer. The airline expects revenue per seat – an industry-standard way to measure profits – to be 17% higher in the second quarter started than in 2019. The recovery has already: unit revenues in March were 9% from 2019, Chief Commercial Officer Andrew Nocella said.

The summer resumption will be felt across most of United’s network. Domestic leisure forward bookings are robust. Near Latin America, demand is high. And the carrier anticipates “record” transatlantic demand. Asia, long closed, is showing signs of life, with sustained demand after Australia and South Korea reopened to international travellers. But overall demand in Asia will be depressed as long as Japan and China continue to restrict travel, Nocella said.

Early in the pandemic, United, with its reliance on business travel and its vast network in Asia, was uniquely beaten among major airlines. But it has restored its network to increase flights to domestic leisure destinations, including Florida. Now, with Asia reopening and business travel returning, United believe they are uniquely positioned to take advantage of the recovery.

To illustrate this, Nocella noted that business travel was 30% lower than in 2019 during the first quarter, but in March it was only 20% lower. The airline sees “a huge upside” in business travel with the reopening of offices, particularly in San Francisco, where United operates a major hub. Tech companies have lagged other industries in returning to business travel, but Nocella sees signs that even United’s tech corporate accounts are get workers back on the road. “We are optimistic for business,” he said.

Kirby was even more positive. “There has been a structural change in travel. Once people start traveling again, you realize how much you missed it. It’s not just a pent-up demand… We are social creatures and we need to be with others,” he said.

“I believe that we will exceed [2019] on a permanent structural basis,” he added. “But that’s just one guy’s opinion.”

United has seen no appreciable increase in demand since a federal judge overturned the mask warrant. But the carrier is asking the Biden administration to cancel pre-departure testing for inbound international travelers to the United States. This, United said, will boost traveler confidence and international travel.

Despite all the optimism, United spilled more red ink in the first quarter. The carrier reported an adjusted net loss of $1.4 billion on $7.6 billion in operating revenue, down 21% from 2019. This generated a pretax margin of minus 23.2 %. There were a few bright spots. Freight, for example, generated $627 million in revenue, up 119% from 2019, as shipping remains constrained while businesses replenish inventory. United believes cargo yields will remain strong in the near term and it will have enough storage capacity to meet demand, even as it cuts dedicated cargo flights.

In the second quarter, United expects to generate operating margins of 10%. The airline expects to be profitable for the full year.

“We’re in the first leg of the recovery,” Kirby said. “That’s why, unless something bad happens in the world, in 2023, reaching 2019 margin levels looks pretty easy.”