United Airlines sees US shutdown as risk to travel confidence

By Rajesh Kumar Singh CHICAGO (Reuters) -United Airlines Scott Kirby warned on Thursday that an extended government shutdown risks taking a toll on airline bookings as well as flight operations. The shutdown has entered its third week due to a political stalemate over government funding, amplifying a long-standing shortage of air traffic controllers. It has slowed air traffic at times in some cities. More than 13,000 air traffic controllers and 50,000 Transportation Security Administration officers received a partial paycheck in recent days and will not get paid later this month if the standoff is not resolved. Kirby said there has not been a measurable impact from the shutdown as a vast majority of air-traffic controllers are still showing up to work. A greater communication and coordination from the Federal Aviation Administration is also helping airlines, he added. But as the shutdown drags on, Kirby said people would start losing confidence in the government's ability to resolve the standoff, impacting travel bookings. "I hope our politicians will figure out how to get in a room, compromise, and get something done," he told analysts on an earnings call. United's shares were down about 6% in afternoon trade as concerns about the shutdown as well as its pricing power overshadowed its upbeat earnings outlook. CAPACITY ADJUSTMENT PLANS The Chicago-based airline has forecast a stronger-than-expected profit in the fourth quarter as it expects rising travel demand and improved pricing power to produce the highest quarterly revenue in the company's history. Its third-quarter revenue, however, fell short of Wall Street estimates due to operational issues at Newark airport as well as weaker unit revenue, a proxy for pricing power, in both domestic and international markets. The airline's unit revenue declined 3.3% year-on-year in the domestic market in the third quarter and dropped 7.1% on international routes. Conor Cunningham, an analyst with Melius Research, said United's mid to high-single digit capacity addition in all regions during the quarter hurt its unit revenue. United plans to fix its capacity problem. Chief Commercial Officer Andrew Nocella said the company will adjust its summer capacity next year, including reducing seats for the July Fourth holiday period. It also expects to keep its transatlantic capacity flat to negative in the third-quarter of 2026. "We … remain focused on refinements we can make to the network and commercial strategies to build a stronger margin," Nocella told analysts. (Reporting by Rajesh Kumar SinghEditing by Nick Zieminski)

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