United Airlines Faces Potential Losses Due to Decreased Government Travel

United Airlines could face significant revenue losses as government employee travel has declined following President Donald Trump’s inauguration and subsequent layoffs and buyouts led by the Department of Government Efficiency (DOGE). The airline’s Chief Financial Officer, Mike Leskinen, highlighted at a Barclays conference on Wednesday that government travel comprises 2% of United’s business. With the airline generating almost $52 billion in total passenger revenue in 2024, even a slight drop in this sector could cost millions.

Leskinen noted the decline in government bookings: “Government employee travel has fallen off. I don’t know how long that’s going to be persistent, but it quickly gets filled up with other demand for our business. However, we have seen some slowing in government sales.”

Despite the dip in government travel, United’s stock has soared 142% over the last year, buoyed by a rebound in post-pandemic travel and a strong international flight schedule. Federal law mandates that government employees must fly on American-owned airlines such as United, Delta Air Lines, Southwest, and Alaska Airlines, which has traditionally secured a steady stream of government travelers.

The downturn is likely linked to the DOGE-initiated mass layoffs and employee buyouts across U.S. government agencies, a move Trump and Elon Musk, head of DOGE, claim aims to boost productivity and reduce federal spending. According to the Office of Management and Budget, approximately 75,000 federal employees accepted buyouts last week, accounting for 3.75% of the federal workforce. This is part of an initiative to reduce the workforce by 5% to 10%. Additionally, over 9,000 employees from the U.S. Agency for International Development were recently placed on administrative leave.

This trend of reduced government travel is causing concern among other companies with federal contracts. Craig Safian, CFO of Gartner, recently informed investors that U.S. federal government contracts represented about $270 million, or 5% of their total business last year. “Government changes may affect business in the short term,” Safian stated. Gartner currently holds four contracts, totaling approximately $1 million, that are listed on a DOGE webpage outlining federal budget cuts.

Requests for comments from United Airlines and Gartner were not immediately returned.

Sources: AirGuide Business airguide.info, bing.com, finance.yahoo.com