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- United Airlines reported a drop in government employee travel post-Trump inaugur...
United Airlines Anticipates Financial Hit from Reduced Government Employee Travel
Government Cutbacks Impact Travel Demand
United Air could face financial setbacks due to changes in federal government travel.
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Following the inauguration of President Donald Trump, United Airlines has reported a significant decline in government employee travel. This downturn has impacted the company's revenue, as government travel accounts for approximately 2% of its business.
DOGE-Led Layoffs and Buyouts Affect Travel
The fall in government employee travel is largely attributed to mass layoffs and buyout programs led by the Department of Government Efficiency (DOGE). These measures, aimed at improving productivity and reducing federal spending, have resulted in the departure of over 75,000 federal employees. This reduction represents 3.75% of the government's workforce, nearing the White House's goal of 5% to 10%.
United CEO Expresses Concern
United Airlines CEO Mike Leskinen has acknowledged the decline in government employee travel at a recent Barclays conference. He noted that while it is unclear if this trend will persist, it has led to a slowdown in government sales.
American-owned Carriers Affected
Since 1974, a law has mandated that federal government employees exclusively travel on airlines owned by American companies. As such, the reduction in government employee travel impacts American-owned carriers like United, Delta Air Lines, Southwest, and Alaska Airlines.
Other Companies Grapple with Changes
United Airlines is not the only company affected by the decreased demand for government travel. Gartner, a technology research and consulting firm, has contracts worth around $270 million with the US federal government, which accounts for 5% of its total business. Its CFO, Craig Safian, has expressed concern that government changes may impact the company's short-term revenue.
