United Airlines is sounding the alarm over the potential effects of a prolonged government shutdown on travel confidence. Scott Kirby, the airline’s CEO, expressed concerns that ongoing political impasses could negatively influence both flight operations and airline bookings.
Impact of the Government Shutdown
The shutdown has now reached its third week, primarily due to a stalemate regarding government funding. This has exacerbated an existing shortage of air traffic controllers, resulting in occasional delays in air traffic across various cities. Recently, over 13,000 air traffic controllers and 50,000 TSA officers received partial paychecks. If the deadlock continues, they will not receive anything for the duration of the shutdown.
Current Situation and Future Concerns
So far, there has been no significant effect on United’s operations, as most air traffic controllers are still reporting for duty. The Federal Aviation Administration (FAA) has been providing better communication, which benefits the airlines. However, Kirby warned that if the deadlock persists, public confidence in the government’s ability to handle the situation may decline, which could lead to decreased travel bookings.
Financial Outlook and Revenue Challenges
Despite these challenges, United Airlines is projecting a robust profit for the fourth quarter, anticipating a surge in travel demand and improved pricing power. This could result in the highest quarterly revenue in the company’s history. Nevertheless, the airline’s third-quarter revenue fell short of Wall Street expectations, primarily due to operational issues at Newark airport and weaker pricing power.
- Domestic unit revenue decreased by 3.3% year-on-year.
- International unit revenue saw a decline of 7.1%.
Capacity Adjustments on the Horizon
Analyst Conor Cunningham from Melius Research noted that United’s mid to high-single digit expansion in capacity contributed to reduced unit revenue across all regions. To address this, the airline plans to reassess its capacity strategies. Chief Commercial Officer Andrew Nocella indicated that they would reduce seat availability during peak travel periods, such as the July Fourth holiday.
United is also looking at keeping its transatlantic capacity stable or slightly declined for the third quarter of 2026. “We remain focused on making necessary adjustments to our network and commercial strategies to enhance margins,” Nocella stated during an analyst call.
As concerns regarding the shutdown and pricing power linger, United’s shares experienced a decline of approximately 6% in afternoon trading. The airline continues to hope for a resolution among lawmakers to restore confidence in the travel sector.
