United Airlines, the second largest commercial carrier in the world and a co-founder of the Star Alliance of airlines that includes bmi British Midland and Lufthansa, has warned that it faces collapse because of a disastrous loss of business since 11 September.
The admission comes in a letter from United's chief executive, James Goodwin, to all 100,000 of the airline's employees worldwide. Mr Goodwin lays out how the airline's financial position, already grave before those events, has become significantly worse. "Before 11 September we were not in a comfortable financial state, with costs exceeding our revenue on a daily basis," he wrote. "Today, we are literally haemorrhaging money. Clearly, this bleeding has to be stopped – and soon – or United will perish some time next year."
Wall Street analysts are divided over whether it is conceivable that an airline that accounts for such a large share of global travel could really go under. "I would be shocked if United perishes a year from now," said Glen Engel, an analyst with Goldman Sachs.
But Helane Becker, of the Buckingham Research Group, noted that United would soon report "ridiculously horrible" losses. The carrier, which has already announced plans to cut 20,000 jobs and slash operations, has "lost billions of dollars and will lose billions more".
Earlier this week, United said it was cutting its US schedule by almost 30 per cent. After 31 October it will operate 1,664 domestic flights, compared with 2,400 before 11 September. Mr Goodwin's letter said: "We are in nothing less than a fight for our life. Never in our 75-year-old history have we faced an economic challenge of this magnitude, when the drop-off in air travel has been so unexpected and so prolonged."
United's load factor, or percentage of seats filled, from 11 September until the end of the month was just 53 per cent, compared with 72.3 per cent in the month to 10 September. Air travel in the US remains about 30 per cent below normal, with those flying often doing so on sharply reduced fares.