Coronavirus Grounds 10% Of United North American Flights

United Airlines Holdings Inc. UAL is planning fewer flights in April as the ongoing coronavirus epidemic hits demand for travel. Pay rises and hiring will also be frozen.

What Happened

United Airlines announced it would cut flights within the U.S. and Canada by 10% and those to international destinations by 20% from April. Similar cuts are scheduled for May. The airline is also planning to ground some of its wide-bodied aircraft, according to Reuters.

Additional measures include a freeze on all new hiring until June 30 other than roles that are crucial for operations.

Airline rival JetBlue Airways Corporation JBLU is also cutting flights by nearly 5% in the “near term” to “address the fall in demand,” Reuters reported Wednesday. 

JetBlue said it was taking steps to preserve cash and has instituted measures like canceling scheduled meetings and events and a reduction in hiring for “frontline and support center positions.”

Why It Matters

Airline companies all over the world over are grappling with the impact of the Covid-19 epidemic. Deutsche Lufthansa AG (OTC: DLAKF) cut capacity equivalent to one-fifth of its fleet on Wednesday. Airline honchos in Europe are warning that the worst economic damage has yet to be felt by the industry.

However, for some investors, this may present a buying opportunity. Warren Buffet lead Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) purchased 976,000 shares of United’s rival Delta, making a $45.3 million investment at $46.40 per share.

Price Action

United Airlines shares traded 0.79% lower at $59 in the after-hours session on Wednesday. The shares had closed the regular session 2.02% higher at $59.47.