• Joe Breitfeller

United Airlines Announces First Quarter Net Loss of $1.7 Billion on Revenues of $8 Billion

United Airlines announced on Thursday a first quarter net loss of $1.7 billion or a diluted loss per share of ($6.86) on revenues of $7.98 billion. The carrier reported an adjusted first quarter net loss of $639 million or ($2.57) per share.

United Airlines Boeing 737-900ER - Courtesy United Airlines

Yesterday (April 30, 2020), United Airlines reported a first quarter net loss of $1.7 billion or ($6.86) per diluted share on revenues of $7.98 billion. The first quarter adjusted net loss was $639 million or ($2.57) per diluted share. At the close of business on April 29, 2020, the carrier had a total liquidity of around $9.6 billion, including an undrawn revolving credit facility of $2 billion. United expects a second quarter daily cash burn rate of between $40 million and $45 million. In Thursday’s announcement, United Airlines’ Chief Executive Officer, Oscar Munoz said,

“Throughout the COVID-19 crisis we have maintained our focus – first on the safety of our customers and our people and second on swiftly taking action to keep United operating. We have been at the forefront of warning how deep an impact we expect this crisis could have and how long we expect it could last. We’ve also led the industry in taking decisive steps to mitigate the operational and financial impacts of COVID-19 – making deep schedule reductions, drastically reducing spending and aggressively raising liquidity. While we are still in the midst of this crisis, we will not hesitate to make difficult decisions we believe will ensure the long term success of our company. When demand returns, we believe we’ll be well positioned to bounce back strongly and quickly because of our early and aggressive efforts to fight the worst financial crisis in aviation history.”

United Airlines was the first U.S. carrier to make aggressive capacity reductions and the company suspended share repurchases on February 24, 2020. Share repurchases were terminated on April 24, 2020 as required by the U.S. CARES Act Payroll Support Program (PSP). Excluding CARES Act grants and loans, United has raised $4 billion in new liquidity since early March in three secured term loan facilities, new aircraft financing and an equity offering. The company also entered an agreement with a BOC Aviation Limited subsidiary for lease financing of six Boeing 787-9 and 16 Boeing 737 MAX 9 aircraft scheduled for delivery in 2020. United has suspended merit salary increases for management and administrative employees, instituted a hiring freeze and offered a voluntary unpaid leave of absence program for U.S. employees. Currently, over 20,000 United team members are participating in the voluntary leave program. The company has also postponed non-critical projects, cut spending on vendors and contractors and reduced 2020 CAPEX by approximately $2.5 billion. Additionally, the company will only take delivery of aircraft that already have financing in place.

As previously announced, United Airlines will receive $5.0 billion from the U.S. Treasury under the CARES Act Payroll Support Program (PSP) including a $3.5 billion grant and a $1.5 billion low interest 10 year loan. Under the program, United has agreed not to reduce wages or furlough employees through September 30, 2020. The company has also applied for a separate loan provision under the CARES Act which will allow the carrier to borrow up to $4.5 billion from the U.S. Treasury for a term of up to five years. In pre-market trading Friday morning, shares in United Airlines Holdings, Inc. (NASDAQ: UAL) were down 5.0% at $28.10 per share (8:21 AM EDT)

Source: United Airlines

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