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Tag: Scott Kirby

  • FAA reducing air traffic by 10% across 40 ‘high-volume’ markets during government shutdown

    WASHINGTON (AP) — The Federal Aviation Administration said Wednesday that it was taking the extraordinary step of reducing air traffic by 10% across 40 “high-volume” markets beginning Friday morning to maintain travel safety as air traffic controllers exhibit signs of strain during the ongoing government shutdown.

    The cutback stands to impact thousands of flights nationwide because the FAA directs more than 44,000 flights daily, including commercial passenger flights, cargo planes and private aircraft. The agency didn’t immediately identify which airports or cities will be affected but said the restrictions would remain in place as long as necessary.

    “I’m not aware in my 35-year history in the aviation market where we’ve had a situation where we’re taking these kinds of measures,” FAA Administrator Bryan Bedford said at a news conference.

    Air traffic controllers have been working unpaid since the shutdown began Oct. 1, and most have been on duty six days a week while putting in mandatory overtime. With some calling out of work due to frustration, taking second jobs or not having money for child care or gas, staffing shortages during some shifts have led to flight delays at a number of U.S. airports.

    Bedford, citing increased staffing pressures and voluntary safety reports from pilots indicating growing fatigue among air traffic controllers, said he and U.S. Transportation Secretary Sean Duffy did not want to wait until the situation reached a crisis point.

    “We’re not going to wait for a safety problem to truly manifest itself when the early indicators are telling us we can take action today to prevent things from deteriorating,” Bedford said. “The system is extremely safe today and will be extremely safe tomorrow. If the pressures continue to build even after we take these measures, we’ll come back and take additional measures.”

    He and Duffy said they would meet with airline executives later Wednesday to determine how to implement the reduction in flights before a list of the affected airports would be released sometime Thursday.

    Airlines and passengers wait for information

    United, Southwest and American all said they will try to minimize the impact on consumers as they cut their schedules to comply with the order.

    Calls to the customer service hotlines at United and American were answered within a few minutes Wednesday afternoon, suggesting anxious passengers were not swamping the airlines with questions about the status of their upcoming flights.

    In a letter to employees, United CEO Scott Kirby promised to focus the cuts on regional routes and flights that don’t travel between hubs. He said the airline will try to reschedule customers when possible and will also offer refunds to anyone who doesn’t want to fly during this time, even if their flight isn’t canceled.

    “United’s long-haul international flying and our hub-to-hub flying will not be impacted by this schedule reduction direction from the FAA,” Kirby said. “That’s important to maintain the integrity of our network, give impacted customers as many options as possible to resume their trip, and sustain our crew pairing systems.”

    Airline industry analyst Henry Harteveldt, who is president of Atmosphere Research Group, said he thinks the government may have bungled this announcement by not meeting with airlines first and giving them more time to adjust schedules made months in advance.

    “To tell airlines you’ve got 48 hours to rebuild your schedules at 90% of what you’ve got isn’t much time, and it’s going to result in a lot of chaos,” said Harteveldt, who was waiting to hear if his own flight from San Francisco to Dallas on Saturday would be canceled. He added that the Trump administration may be using aviation safety “to force the two sides in Washington back to the negotiating table to resolve the shutdown.”

    AAA spokesperson Aixa Diaz advised travelers to watch for flight updates on the airline’s app and airport social media accounts. She also recommended allowing plenty of time at the airport before a scheduled flight.

    “It’s frustrating for travelers, because there’s not much you can do. At the end of the day, you either fly or you don’t,” she said.

    The cuts could represent as many as 1,800 flights and upward of 268,000 seats combined, according to an estimate by aviation analytics firm Cirium. For example, O’Hare International Airport in Chicago could see 121 of its 1,212 flights currently scheduled for Friday cut if the FAA distributes the reductions equally among impacted airports, Cirium said.

    Data shows worsening weekend staffing

    The FAA regularly slows down or stops flights from taking off toward an airport for a number of reasons, including weather conditions, equipment failures and technical problems. Staffing shortages also may lead to slowed or halted departures if there aren’t enough controllers and another facility can’t absorb some of the work load.

    Last weekend saw some of the worst staffing shortages of the shutdown, which became the longest on record early Wednesday.

    From Friday to Sunday evening, at least 39 different air traffic control facilities announced there was some potential for limited staffing, according to an Associated Press analysis of operations plans sent through the Air Traffic Control System Command Center system. The figure, which is likely an undercount, is well above the average for weekends before the shutdown

    During weekend periods from Jan. 1 to Sept. 30, the average number of airport towers, regional centers overseeing multiple airports and facilities monitoring traffic at higher altitudes that announced the potential for staffing issues was 8.3, according to the AP analysis. But during the five weekend periods since the shutdown began on Oct. 1, the average more than tripled to 26.2 facilities.

    Travel industry joins unions in urging shutdown’s end

    Major airlines, aviation unions and the wider travel industry have urged Congress to end the shutdown.

    Wednesday’s announcement came on the heels of Duffy warning a day earlier that there could be chaos in the skies next week if the shutdown drags on long enough for air traffic controllers to miss their second full paychecks next Tuesday.

    Duffy said the FAA wanted to take a proactive approach instead of reacting after a disaster. He pointed to all the questions that arose after the deadly midair collision in January between a commercial jet and a military helicopter near Ronald Reagan Washington National Airport about why FAA didn’t recognize the risks and act sooner.

    “We learned from that. And so now we look at data, and before it would become an issue, we try to assess the pressure and try to make moves before there could be adverse consequences,” Duffy said. “And that’s what’s happening here today.”

    ___

    Yamat reported from Las Vegas, and Funk from Omaha, Nebraska. Associated Press journalist Christopher L. Keller in Albuquerque, New Mexico, contributed.

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  • United CEO Scott Kirby Doubles Down on Brand Loyalty Amid Shutdown

    United Airlines CEO Scott Kirby said his company is doubling down on brand loyalty. Photo by Chip Somodevilla/Getty Images

    United Airlines, which has increasingly tapped into premium offerings and brand-loyalty programs, expects surging revenue in these areas to deliver a strong finish to 2025—so long as the ongoing government shutdown doesn’t dampen travel demand.

    During United’s third-quarter earnings call today (Oct. 16), CEO Scott Kirby told analysts that the airline’s cancellation rates and on-time performance have remained steady so far. “There hasn’t really been a measurable impact in the first couple of weeks of October. [But] the longer this drags on, obviously the risks will grow on both of those points, so I hope our politicians will figure out how to get in a room, compromise and get something done,” he said.

    The shutdown, now in its third week, is disrupting flights nationwide due to staffing shortages at the Federal Aviation Administration (FAA). The shutdown has placed added strain on air traffic controllers, many of whom are expected to work with reduced or no pay until the government reopens.

    Kirby said most controllers continue to show up for duty, but warned that a prolonged shutdown would eventually take a toll. “Every day that goes by, the risk to the U.S. economy grows. I hope we will avoid an unforced error here,” he said.

    Delta Air Lines CEO Ed Bastian raised similar concerns last week, cautioning that “cracks will soon emerge” if the shutdown isn’t resolved “beyond another 10 days or so.”

    United and Delta pivot to premium offerings

    United and Delta—the nation’s two largest airlines by market capitalization—are better positioned than most to weather potential turbulence. Both carriers have surged ahead of rivals by doubling down on premium seats and cultivating customer loyalty.

    Between July and September, United reported $15.2 billion in revenue, up 2.6 percent year-over-year but slightly below analyst expectations. Net income came in at $949 million, a modest 1 percent decline. A bright spot is the premium cabins, where revenue rose 6 percent, while loyalty program revenue jumped 9 percent from a year ago. The company expects that loyalty-driven momentum will help it post record-high operating revenue in the final quarter of 2025.

    To sustain that growth, United plans to invest more than $1 billion next year in enhancing its customer experience. The upgrades include adding more seatback screens and extra legroom, increasing food spending by 25 percent and equipping its entire fleet with SpaceX’s Starlink wifi by 2027.

    Delta has already benefited from a pivot to luxury. The airline reported better-than-expected quarterly revenue and profit earlier this month and expects its premium cabins to surpass economy-class sales for the first time next year.

    Kirby said United’s success reflects a long-term bet on a fundamental shift in traveler behavior. For decades, he noted, airlines were viewed as interchangeable commodities mainly chosen on price and schedule. But as most carriers now offer comparable routes and fares, loyalty and brand differentiation have become the new battleground.

    “What we’ve proven, and continue to prove in the last few years, is that it is possible to transform into a brand-loyal airline,” he said.

    United CEO Scott Kirby Doubles Down on Brand Loyalty Amid Shutdown

    Alexandra Tremayne-Pengelly

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  • Airline CEO says the era of cheap flights is over: “You can’t have a business model that people hate”

    United Airlines CEO Scott Kirby is sounding off about the state of air travel — and his prediction isn’t great news for budget fliers.

    Speaking Thursday at the Airline Passenger Experience Association’s conference in Long Beach, Kirby flatly declared that low-cost carriers like Spirit Airlines are doomed. “Because I’m good at math,” he quipped when asked why he believes Spirit is headed out of business, according to NBC News.

    Spirit’s financial turbulence

    Spirit Airlines filed for Chapter 11 bankruptcy protection late last month — its second time in less than a year. After reemerging from bankruptcy in March, the airline was hit with weaker-than-expected customer demand and persistently high costs. In recent months, Spirit has cut a dozen destinations even as competitors like United, JetBlue, and Frontier expanded service.

    Kirby has long been critical of the discount model, arguing that selling rock-bottom fares while charging extra for nearly everything else — from carry-on bags to seat assignments — has run its course. “You can’t have a business model that customers hate. You can’t have a business model predicated on ‘screw the customer,’” he said.

    Read more: Spirit Airlines files for bankruptcy

    Spirit pushes back

    Spirit wasn’t about to let Kirby’s remarks slide. After he made similar comments at another event in Washington, D.C., this week, the airline’s official X account clapped back: “Scott is finally right about something — it is all about customers. Our Guests love low fares, especially our new Spirit First and Premium Economy options. Maybe that’s why United executives can’t stop yapping about us.”

    Still, Spirit has shrunk significantly in the past year, while rival Frontier has been vocal about its goal to overtake Spirit as the country’s top ultra-low-cost carrier.

    What it means for travelers

    The rise of “basic economy” on major airlines like United and Delta has also cut into the ultra-low-cost niche by offering cheaper fares that come with more amenities and global networks. Kirby suggested that spells trouble for carriers that can’t match the value. “The business model doesn’t work,” he said, likening Spirit and its peers to the “last man on a sinking ship.”

    For fliers hoping for a return to consistently cheap tickets, the message from one of the industry’s most powerful executives is clear: don’t count on it.

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  • The Israel-Hamas war is affecting the financial outlooks of these large companies

    The Israel-Hamas war is affecting the financial outlooks of these large companies

    The ‘Rhapsody of the Seas’ cruise liner carrying US citizens leaves the Israeli port of Haifa to be evacuated to the Mediterranean island of Cyprus on October 16, 2023, amid the ongoing battles between Israel and the Palestinian Islamist group Hamas. 

    Aris Messinis | AFP | Getty Images

    Some of the world’s most well-known companies are already seeing the Israel-Hamas war weighing on operations.

    On Oct. 7, militant group Hamas struck Israeli towns in a surprise attack and took more than 200 hostages. More than 7,000 people have been killed in Gaza, per Palestinian health officials, while the Israeli Defense Forces said more than 1,400 have been killed in the country.

    Corporations that do business or have operations in the region have already begun seeing the war change their financial outlooks as the unrest weighs on everything from advertising dollars to tourism to supply chains. These early admissions come as world leaders grow increasingly concerned that the conflict will further intensify, with international calls for a cease-fire being rejected.

    United Airlines said fourth-quarter performance could vary depending on the length of flight suspensions in Tel Aviv. Its updated range for adjusted earnings per share came in below analysts’ forecasts.

    “We have unmatched geographic diversity with a large domestic network complemented by the largest long-haul international network and both are solidly profitable,” CEO Scott Kirby said earlier this month. “While this is a great attribute, it does create some short-term risk and volatility as we’re seeing right now with the transitory hit to margins this quarter as a result of the tragedy in Israel.”

    Travel changes

    United is one of several carriers including Delta Air Lines and American Airlines that have rushed to change schedules as the conflict has unfolded. Notably, El Al, the Israeli flag carrier, said it would fly on the Jewish Sabbath for the first time in more than four decades to help bring reservists abroad back to the country.

    Across the travel industry, the war is on the mind of corporate leaders. Plane-maker Boeing said in a regulatory filling that the conflict could potentially affect certain suppliers, in addition to airlines.

    About 1.5% of Royal Caribbean capacity in the fourth quarter had planned to visit Israel, CEO Jason Liberty said on the cruise line’s call on Thursday. A few of the adjusted sailings that were previously expected have home ports in Haifa, a city in the northern region of the country.

    The company also offered free use of its Rhapsody of the Seas vessel to the U.S. government to aid in the evacuation of Americans from Israel. Between the changed itineraries and use of the ship, the company estimated it would have an impact of 5 cents per share on its earnings. The company expects to see between $6.58 and $6.63 in adjusted earnings per share for the year.

    El Al Airlines airplane flying on February 2023.

    Nurphoto | Nurphoto | Getty Images

    “I would … like to recognize the incredible effort from our shoreside teams and crew on board Rhapsody of the Seas who have been working tirelessly with the U.S. Department of State to help safely evacuate Americans from Israel,” Liberty said. “My heartfelt gratitude goes out to all involved.”

    Still, Liberty said the cruise line’s customer base is sticky, so it may become more of a question of where they are going to travel rather than if they are going to cancel their plans.

    “They’re going to go somewhere with us,” he said. “That’s what we’re focused on making sure they’re doing.”

    ‘Unpredictable nature’

    Technology companies were among those seeing the conflict affect the workforce, advertising spending and supply chains.

    Snap said in its latest earnings release that it saw pauses in spending from a “large number of primarily brand-oriented advertising campaigns” immediately after the war began. That has weighed on revenue quarter to date.

    While the company said some of the campaigns that initially paused have now resumed, the company has also seen others that didn’t originally stop advertising now pause. Snap said it would be “imprudent” to offer formal guidance on what to expect for the current quarter “due to the unpredictable nature of war.”

    Meta finance chief Susan Li said the Facebook and Instagram parent has seen softer advertising spending so far in the quarter, correlating in timeline with the start of the conflict. Li noted that it isn’t necessarily due to any one event, but cooler spending has aligned in the past with the start of conflicts such as the Russian invasion of Ukraine last year.

    “This is something that we’re continuing to monitor,” Li told analysts during the company’s earnings call on Wednesday. “We’ve reflected the latest trends and advertiser reaction that we’ve seen into our Q4 outlook — which, again, we think reflects the greater uncertainty and volatility in the landscape ahead.”

    Align Technology is expecting increased headwinds from the uncertainty and potential supply chain issues tied to the conflict, according to Chief Financial Officer John Morici. He said the fourth-quarter operating margin, when adjusted for generally accepted accounting principles, should be down from the prior quarter as the company offers severance to adjust to headcount changes in this situation.

    Multiple corporations including Aon and West Pharmaceutical noted a continued focus on supporting employees and their family members who live and work in the region. Israel is known in part for its vibrant startup and technology scene, with entrepreneurs now wondering how to push forward in the new normal, especially as citizens get called to serve in reserve units.

    ServiceNow CEO William McDermott said during the company’s call with analysts on Wednesday that employee Shlomi Sividia was among those murdered at the Supernova Music Festival. He said Sividia was “highly respected, admired and a good friend to many.”

    “We stand in solidarity with our team and with their families. Terrorism has caused the unfathomable humanitarian crisis that now engulfs millions of people in Israel and Gaza,” McDermott said. “Our hearts pray for the innocent on all sides. Even with optimism in short supply, we choose to honor the dream of a peaceful and prosperous future for the Middle East region.”

    Companies specializing in defense have also been on alert as another international conflict breaks out.

    General Dynamics, the biggest U.S. artillery shell producer, had already been ramping up artillery production to meet needs amid the war in Ukraine, according to finance chief Jason Aiken. Now, the company is working to increase production to as high as 100,000 units per month, up from 14,000.

    “I think the Israel situation is only going to put upward pressure on that demand,” Aiken said during General Dynamics’ Wednesday earnings call.

    — CNBC’s Robert Hum, Morgan Brennan and Leslie Josephs contributed reporting.

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  • Passengers were stuck because United Airlines canceled their flights. The CEO took a private plane

    Passengers were stuck because United Airlines canceled their flights. The CEO took a private plane

    United Airlines CEO Scott Kirby apologized Friday for hopping on a private plane to get out of the New York area earlier this week while thousands of United passengers were stranded because the airline canceled so many flights.

    “Taking a private jet was the wrong decision because it was insensitive to our customers who were waiting to get home,” Kirby said in a statement issued by the airline. “I sincerely apologize to our customers and our team members who have been working around-the-clock for several days — often through severe weather — to take care of our customers.”

    Kirby concluded by promising “to better demonstrate my respect for the dedication of our team members and the loyalty of our customers.”

    A bill to extend internet gambling in New Jersey for another five years is in the hands of Gov. Phil Murphy following its approval by the state Legislature.

    A bill to let Danish offshore wind energy developer Orsted keep tax credits that it otherwise would have to return to New Jersey ratepayers was approved by the slimmest of margins in the state Legislature Friday afternoon.

    New Jersey Democratic Gov. Phil Murphy has signed a $54.3 billion budget. It boosts spending 7% over last year.

    Officials and residents of several New Jersey shore towns say the state’s law decriminalizing marijuana use is having an unintended effect: emboldening large groups of teenagers to run amok on beaches and boardwalks, knowing there is little chance of them getting in trouble for it.

    Kirby caught the private flight from Teterboro, New Jersey, to Denver on Wednesday, when United canceled 750 flights — one-fourth of its schedule for the day. That figure does not include flights on United Express.

    United has canceled nearly 3,000 flights this week, with the largest number at its Newark Liberty International Airport hub in New Jersey, which was hit by thunderstorms for much of the week.

    Kirby blamed disruptions in Newark last weekend on a shortage of Federal Aviation Administration air traffic controllers. He said in a note to employees “that the FAA frankly failed us” by reducing the rate at which planes could arrive and depart the airport, where United is the dominant carrier.

    Canceled flights left United planes and crews out of position, hobbling the airline when bad weather hit on Sunday, Kirby said.

    As United continued to struggle throughout this week, Transportation Secretary Pete Buttigieg, whose department includes the FAA, said on Twitter that airlines had recovered from the storms “with the exception of United.” He drove home the point by including a bar graph that compared United’s cancellation rate with the rest of the industry.

    United’s operation has improved since midweek. The percentage of canceled flights fell from 26% on Wednesday to 18% Thursday and 8% through Friday evening, according to tracking service FlightAware. However, even on Friday, United was on pace to lead all U.S. carriers in canceled flights for a seventh straight day.

    United vowed to fix its operation in time for the July 4 holiday weekend, which promises to be a hectic one at the nation’s airports. More than 2.7 million people were screened Thursday at Transportation Security Administration checkpoints, and Friday was expected to bring similar crowds — possibly bigger.

    United passengers have taken to social media and talked to reporters about long airport lines and sleeping in airports after flights were canceled.

    Unions representing the airline’s pilots and flight attendants have joined in the criticism, accusing United management of poor planning, a lack of crew schedulers, and operating too many flights.

    Chicago-based United said it did not pay for the CEO’s flight on Wednesday. The airline declined to say whether Kirby frequently takes private planes.

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  • Severe weather, FAA shortfalls kick off rocky start to summer air travel

    Severe weather, FAA shortfalls kick off rocky start to summer air travel

    Passengers wait at the Newark Liberty International Airport as more than 2000 flights were canceled due to the nationwide storm in New Jersey, United States on June 27, 2023. 

    Fatih Aktas | Anadolu Agency | Getty Images

    Flight disruptions mounted Tuesday as severe storms and staffing issues kicked off a rocky start to summer.

    Roughly 3,000 U.S. flights were delayed as of midday Tuesday and another 1,100 were canceled as thunderstorms that derailed thousands of trips over the weekend lingered. That’s on top of more than 8,800 U.S. delays and 2,246 cancellations on Monday.

    The disruptions come ahead of the busy Fourth of July travel period, when millions are expected to fly. The Transportation Security Administration said it could screen more travelers than in 2019, before the pandemic, raising competition for spare seats.

    The Biden administration has pressured airlines to improve their operations after widespread flight disruptions last spring and summer, which prompted carriers to trim their overambitious schedules. But the industry struggled to recover this past weekend from a series of thunderstorms that didn’t let up for days.

    Thunderstorms are difficult for airlines because they can form with less warning than other major weather obstacles like winter storms or hurricanes. Rolling delays could force crews to reach federally mandated workday limits and further worsen disruptions.

    Some airline executives have also blamed some of the disruptions on shortages of air traffic controllers.

    United Airlines CEO Scott Kirby told staff on Monday that “the FAA frankly failed us this weekend.” He said that during Saturday’s storms the FAA reduced arrival rates by 40% and departures by 75% at Newark Liberty International Airport, one of the airline’s biggest hubs.

    “It led to massive delays, cancellations, diversions, as well as crews and aircraft out of position,” Kirby wrote in a staff note, which was seen by CNBC. “And that put everyone behind the eight ball when weather actually did hit on Sunday and was further compounded by FAA staffing shortages Sunday evening.”

    An FAA spokesman said in a statement: “We will always collaborate with anyone seriously willing to join us to solve a problem.”

    The staffing challenges aren’t new. The Covid-19 pandemic derailed hiring and training of new air traffic controllers, and the agency is now trying to catch up.

    The Department of Transportation’s Office of the Inspector General said in a report last week that air traffic control staffing shortfalls puts air traffic operations at risk. In March, the FAA and some airlines agreed to reduce flights to help ease congestion at busy New York airports because of the staffing issues.

    But the problems persist at a time when airlines are readying crews and schedules for a busy summer season, fueled by sustained travel demand.

    And the disruptions frustrated flight crews who were left waiting on hold for reassignments.

    The Association of Flight Attendants-CWA, which represents flight attendants at United and others said in a memo to members on Monday that hold times for crew scheduling were longer than three hours.

    “There is an absolute recognition by Union leadership and Inflight management that something must be done in order to permanently address these adverse situations resulting from irregular operations,” the union said.

    New York-based JetBlue Airways also faced high levels of flight delays over the past few days and acknowledged it can improve how it handles disruptions in a note to crew members Monday, which was reviewed by CNBC.

    Don Uselmann, vice president of inflight experience at JetBlue, said the airline could have updated crew reporting times more efficiently so staff wouldn’t be waiting for flights and reducing wait times for hotel assignments.

    “Summer peak is officially underway, and extreme weather events, ATC staffing constraints, and the resulting delays will put all airlines to the test,” he said in his note. “This weekend’s [irregular operation] won’t be our last, but the combination of events put acute pressure on the operation and made it more challenging than most.”

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