US in a ‘business recession,’ says United CEO

United Airlines CEO Scott Kirby Monday described the US economy as in a “business recession,” even as consumers continue to spend heavily on travel. “In the US, we’re in a business recession, and consumer is just fine — consumer is strong,” he said on the sidelines of the the annual meeting of global aviation trade group the IATA in Istanbul. That weakness, whether recession or not, has translated to a slower corporate travel recovery than many had anticipated, even as leisure travel surged back last year. Business travel demand at United has “plateaued,” Chief Commercial Officer Andrew Nocella said Monday, at levels better than over the winter but not fully recovered. He declined to put a percentage on how much road warriors were back except to say managed corporates remain down the most, while the recovery is most advanced with small- and medium-sized businesses. American Airlines and Delta Air Lines are seeing similar trends in the recovery of business travel. Managed corporate revenue is at 75-80% of 2019 levels at the former, and 85% at the latter. Delta executives in April described the recovery as “stable.” But the state of corporate travel is a significant concern for airlines. Road warriors drive an outsize portion of revenues, propping up business during periods of slower leisure travel. Changes in the seasonality of business travel hit United in the first quarter when it lost $43m and posted a negative 0.4% operating margin. Kirby in April described it as a “clear change” in travel patterns that the carrier had not fully anticipated. “We remain optimistic about the whole remainder of the year,” Nocella said when asked about the demand outlook after the summer.<br/>