United Airlines posts $1.6 billion loss in virus-scarred 2Q

United Airlines posts $1.6 billion loss in virus-scarred 2Q

United Airlines said Tuesday that it lost $1.63 billion in the second quarter as revenue plunged 87%, and it will operate at barely over one-third of capacity through September as the coronavirus throttles air travel.

The Chicago-based airline burned through $40 million a day from April through June but said it will trim losses to $25 million a day in the third quarter by slashing costs.

CEO Scott Kirby said United cut its cash-burn rate below its closest rivals by shrinking its schedule to meet lower demand and cutting costs across the company. In a statement, he said the moves “positioned United to both survive the COVID crisis and capitalize on consumer demand when it sustainably returns.”

Investors will have to wait for United to provide more details about the quarter and the future outlook on Wednesday, when executives hold a call with analysts and reporters.

United, which started the year with 96,000 employees, said 6,000 have volunteered to take severance packages and leave. Last week, the airline warned 36,000 employees that they could be furloughed in October, although executives said they expect the final job-loss number to be smaller.

The quarterly loss, which was worse than Wall Street expected, followed the plunge in air travel due to widespread travel restrictions and passengers’ fear of flying during the coronavirus pandemic.

Air travel in the U.S. plunged starting in March, hitting bottom in mid-April at just 5% of the year-ago traffic. A slow partial recovery stalled in recent weeks as reported cases of coronavirus surged in many states, particularly in the South and West, and Northeastern states imposed quarantines on visitors from much of the country.

Airline bookings flattened, with United’s hub airport in Newark, New Jersey, being especially hard hit.

U.S. airlines have seen an even sharper drop in international travel. United’s revenue from U.S.-Europe flights nosedived 97%, nearly $1.9 billion, in the second quarter.

Kirby and American Airlines CEO Doug Parker appealed on Tuesday to Vice-President Mike Pence and European Commissioner for Home Affairs Ylva Johansson to allow more travel between the U.S. and Europe. The United States and the European Union block most of each other’s citizens from entering — each side cites fear that visitors from the other side of the Atlantic could bring the virus with them — although exceptions are made for dual citizens, health workers and a few others.

The U.S. airline leaders, joined by the CEOs of Lufthansa and British Airways’ parent, IAG, said transatlantic travel is important to their airlines and the global economy. They said steps taken by airlines and governments together with a co-operative health-screening program will prevent COVID-19 from spreading among passengers.

Investors have turned their attention to what airlines are doing to raise more cash and cut spending to make that money last as long as possible.

United said it began this week with $15.2 billion in available cash and expects to boost that to more than $18 billion by the end of the third quarter. The airline has mortgaged its MileagePlus frequent-flyer program and agreed to a $4.5 billion secured loan from the Treasury Department, although executives say they might not draw on the government loan. That is on top of $5 billion in taxpayer money to keep workers on the payroll through September.

As a benefit of flying less, United chopped its fuel bill by 90%, saving more than $2 billion. Labor costs were lower by nearly $900 million.

United’s loss, adjusted to exclude an income tax benefit and other items, was $2.6 billion. A year ago, the company posted a profit of $1.05 billion.

The adjusted loss worked out to $9.31 per share. That compared with a predicted loss of $8.96 per share, according to a FactSet survey of 17 analysts.

Revenue tumbled from $11.4 billion to less than $1.5 billion, but it still beat analysts’ average forecast of $1.3 billion.

Last week, Delta Air Lines reported a $5.7 billion loss for the second quarter. The outlook is grim too for American Airlines and Southwest Airlines, which are scheduled to release results Thursday.

___

David Koenig can be reached at www.twitter.com/airlinewriter

David Koenig, The Associated Press

aviation

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Sylvan Lake Community Partners reorganizes to better serve clients

The facility was thoroughly cleaned and reorganized during its shutdown due to COVID-19

Alberta’s active COVID-19 cases continue to trend downwards

85 new cases Tuesday, active cases sit at 1,004

Walk a Mile in Her Shoes returns to Sylvan Lake Aug. 21

Sylvan Lake Rotary Club is hosting the third annual event which raises domestic violence awareness

‘Is this a town garden?’ Sylvan Lake resident has been gardening for 7 decades

Most summer days, Joel McCutcheon is in his garden pulling weeds, tending flowers and mowing

Charges likely in fatal attack at central Alberta medical clinic: RCMP

A vigil was held Monday night to mourn the victim

Deaths feared after train derails amid storms in Scotland

Stonehaven is on the line for passenger trains linking Aberdeen with the cities of Edinburgh and Glasgow

Man, 54, charged in connection with fatal attack of Red Deer doctor

Doctor was killed in his walk-in clinic on Monday

Joe Biden selects California Sen. Kamala Harris as running mate

Harris and Biden plan to deliver remarks Wednesday in Wilmington

Donations pour in for family of doctor killed in Red Deer attack

Man has been charged in connection to death of Red Deer doctor

Vigil held in Maskwacis for 10-year-old boy

Samson Cree Nation comes together for comfort, console each other

Cuts to environmental monitoring budget In Alberta’s oilsands are viewed as reckless

The 2019-2020 budget saw $58 million dollars being dedicated to environmental monitoring

Over half of Americans oppose Trump tariff on Canadian aluminum: survey

The survey was conducted Aug. 7 to 9 among 1,513 Canadians and 1,003 Americans

Police investigating after insults, expletives yelled at federal minister’s staff

A 90-second video circulating on social media appears to have been shot by the person who was yelling

Most Read