United Airlines CEO says US in a 'business recession' but consumers 'strong'

By Aditi Shah and Tim Hepher

ISTANBUL (Reuters) -The United States is in a "business recession" but the consumer is "strong", Scott Kirby, chief executive of United Airlines, the world's largest carrier, told reporters at an aviation conference in Istanbul on Monday.

This can be seen as leisure air travellers come back stronger and faster than business travellers, Kirby said at the annual meeting of the International Air Transport Association (IATA).

"Leisure demand is really, really strong. Premium leisure demand is much higher. Business demand hasn't fully recovered yet ... that's taking more time," he said.

"We're probably in either a mild recession or moderate economy, we can see that. I think actually, in the U.S., we're in a business recession, and the consumer is just fine, the consumer is strong."

U.S. economic growth slowed more than expected in the first quarter as an acceleration in consumer spending was offset by businesses liquidating inventories in anticipation of weaker demand later this year amid higher borrowing costs.

As global airlines bounce back from the pandemic they forecast profits to more than double in 2023 buoyed by strong travel demand but warn of challenges including supply chain disruptions and a talent crunch.

Kirby, however, said that airlines will not be able to operate the way they did pre-pandemic. Supply chains are getting better but the bar is getting raised as every airline around the world tries to grow, he added.

"You can't run your airline like it's 2019 ... the world really has changed," Kirby said.

The chief of the world's biggest airline also raised concerns over competing carriers flying over Russia.

"What's going to happen if an airline lands in Russia with some prominent U.S. citizens on board? That is a potential crisis in the making. I think we should solve it before the crisis happens," he said.

Russia has barred U.S. airlines and other foreign carriers from flying over its airspace, in retaliation for Washington banning Russian flights over the U.S. in March 2022 after Moscow sent troops into Ukraine.

United Airlines was forced to temporarily suspend flying over Russian airspace, joining other major U.S. carriers, in a move that has impacted the airline's ability to offer competitive non-stop flights to India and other places.

"It's clearly a big impact to us," Kirby said, noting pre-pandemic United had multiple daily flights between the U.S. and India. "Now we fly one and it's an extra two hours," he said, adding that even with the extra time it cannot fly the other routes non-stop.

"That's disappointing," he added.

Air India and some Gulf-based, Chinese and African carriers continue to fly over Russian airspace, making flying times shorter.

However, newly approved flights for Chinese airlines are avoiding flying over Russian airspace to and from the United States, Reuters reported on June 1.

(Reporting by Aditi Shah; editing by Jason Neely)