United CEO on debt ceiling, new $1 billion Denver investment
United Airlines (UAL) CEO Scott Kirby is putting a lot of capital to work for shareholders in new Boeing 737 Max airplanes, upgraded airport experiences, and added first-class seating.
The last thing Kirby wants to see is America default on its debt in June after another contentious debt ceiling debate. That dire outcome would potentially lead to a US recession that harms returns on these key investments by United Airlines.
"The economy is balanced on a knife's edge," Kirby said on Yahoo Finance Live (video above). "When the Silicon Valley banking scare started, we saw a 15% overnight drop in business bookings, and that tells you the economy is very fragile."
"That's what I am worried about with the debt ceiling," he added. "We don't need an unforced error in the economy — and this would just be an unforced error."
Kirby says demand continues to be strong ahead of the busy Memorial Day travel weekend. But maintaining that momentum will be tough if the US is thrust into a self-created debt ceiling recession.
"If the debt ceiling crisis turns into a bigger crisis is where we are really impacted," Kirby added. "We just shouldn't take the risk — it's a silly, silly risk to think about letting that first domino fall."
Kirby is hopeful politicians will come to a resolution in a timely manner.
However, the contentious situation in D.C. isn't stopping United Airlines from making the major investments it views as necessary to beat the competition such as Jetblue (JBLU), Delta (DAL), and American Airlines (AAL).
United said Tuesday it will add 35 flights, six new routes, a dozen gates, and three clubs to Denver International Airport as part of a $1 billion investment plan. This summer, United will also double the total number of early morning departures and late evening arrivals in and out of Denver.
The airline said it will offer more capacity from Denver than ever before, with over 60,000 departing seats per day.
"It's just a great, growing city," Kirby said on the thinking behind the Denver investment.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips on the banking crisis? Email brian.sozzi@yahoofinance.com
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