United Airlines is set to cut more international flights due to declining number of passengers who have become spooked by the coronavirus outbreak, according to media reports.
Now that health authorities have issued a travel risk warning to Italy and Iran, among other countries, the airline company is increasing flight cancellations to key destinations hit by the virus.
United Airlines announced it is suspending some flight service to Japan, Singapore and South Korea. The airline did not yet respond to whether their flights to Italy would be suspended, but if a big number of passengers opt for a waiver policy, then those flights will be canceled. United Airlines services two flights to Italy -- one to Rome and another to Milan -- both departing Newark International Airport.
Italy has just become the home to the highest outbreak of the virus in Europe. The country also has the third biggest number of deaths, following Iran and China.
Shares of United Airlines fell another 6 percent late Monday, shedding over 75 percent from its recent multi-month trading volume. This drop surpasses their late-2017 lows to return to a range not seen since late 2016.
United Airlines chief executive officer Oscar Munoz told personnel about the possible reduction in service in an email which the airline - the third biggest in the United States - confirmed on Sunday, CNBC reports.
As this developed, Buckingham Research market analyst Daniel McKenzie downgraded his rating on United Airlines from "Buy" to "Neutral," and cut his price target from $105 to $61. So, apparently, United Airlines is looking a lot like one of the airline stocks that investors should sell.
The coronavirus continues to wreak havoc on the global financial markets, dealing a heavy blow on the travel industry to the potential tune of more than $46 billion in losses a month, based on survey results released Thursday by the Global Business Travel Association.
That figure equates to around $560 billion in losses annually, or 40 percent of the airline business' estimated passenger sales for the year. The survey also found that the coronavirus is having a deep impact on corporate meetings and trade events, with almost two-thirds of poll respondents saying they have canceled a few meetings because of the virus scare.
Meanwhile, United Airlines disclosed it is postponing a hiring class for 23 new pilots, just weeks after announcing a new initiative to recruit and train new pilots as travel demand has fallen significantly due to the outbreak.
