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United Airlines (UAL) COO to Step Down, Focus on Cost Cuts

Zacks Equity Research

United Airlines Holdings UAL announced some leadership changes as it focuses on near-term goals to adjust size of the airline per the current demand scenario.
The carrier’s chief operations officer (COO) Greg Hart will step down in order to focus on important medium and long-term issues. He will work on changes in cost structure, including labor costs. The carrier’s CEO Scott Kirby stated, “Demand could be down 30% or it could be down 70%. The way to best survive this crisis is to be able to nimbly adjust the size of the airline, including labor costs, to meet demand and importantly, be ready to bounce back quickly when the virus is defeated.”

Hart will be replaced by Jon Roitman, currently serving as senior vice president of Airport and Network Operations, effective Jun 1. Besides carrying out his current responsibilities, Roitman will take charge of flight operations, technical operations, and safety.

United Airlines Holdings Inc Price


United Airlines Holdings Inc Price

United Airlines Holdings Inc price | United Airlines Holdings Inc Quote

Although “there are tough times ahead”, United Airlines, carrying a Zacks Rank #3 (Hold), is seeing some improvement in demand. As of May 18, the airline has witnessed reduction in cancellation rates and a “moderate improvement in demand” in domestic markets as well as some international routes for remainder of the second quarter of 2020. While the company has lowered scheduled capacity for May and June by approximately 90% year over year, the same for July is expected to be down approximately 75%.

Other U.S. carriers like American Airlines AAL and Delta Air Lines DAL are also witnessing slight increases in travel demand. For instance, during the U.S. Memorial Day weekend, American Airlines’ aircraft was filled about 56%. Earlier in the month, Delta revealed plans to increase its summer capacity amid signs of improvement in domestic travel demand. The company’s CEO Edward Bastian stated that he hopes to add around 200 flights in June and another 200 or 300 flights in July.

Both American Airlines and Delta carry a Zacks Rank #3.

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