The FINANCIAL -- United Airlines (UAL) today announced second quarter 2020 financial results, the most difficult financial quarter in its 94-year history, with a net loss of $1.6 billion, and an adjusted net loss¹ of $2.6 billion. The company continues to take aggressive action to mitigate the impact of the COVID-19 pandemic by raising liquidity and reducing cash burn.
Chicago-based United on Tuesday reported a quarterly loss of about $1.6 billion and said it plans to fly 35% of its normal schedule in the three months through September. That is in line with guidance it gave for August after the airline reduced planned flying because of a recent surge in Covid-19 cases in many parts of the country, The Wall Street Journal wrote.
Total operating revenues were down 87.1% year-over-year, on an 87.8 percent decrease in capacity year-over-year. The company's total liquidity as of the close of business on Monday, July 20, 2020 was approximately $15.2 billion. United now expects liquidity at the end of the third quarter to be over $18 billion.
Cash burn during the second quarter averaged $40 million a day, including $3 million of principal payments and severance expenses. The company currently is forecasting average daily cash burn to be approximately $25 million during the third quarter of 2020 including $6 million of principal repayments and severance expenses.
United believes it did the best job of matching actual capacity to demand among its largest network peers. The company also expects to finish the quarter with the lowest average daily cash burn among large network carriers.
"I am grateful for the professionalism and dedication of our United team members who persevered through an historic and challenging period to deliver for our customers," said CEO Scott Kirby. "While this unprecedented crisis has been difficult for our team, we expect United produced fewer losses and lower cash burn in the second quarter than any of our large network competitors," he added.
The company is focused on remaining flexible to position the airline to bounce back when demand recovers.
In a memo to employees, the Chicago-based airline said 36,000 employees, or 45% of its front-line workers in the U.S. and more than a third of its overall workforce of 95,000, face layoffs on or around Oct. 1. The most affected groups: flight attendants and airport customer service and gate agents, which account for 26,000 of the 36,000, USA Today wrote.
United and other major carriers have been attempting to quell consumers' anxiety about flying during the Covid-19 pandemic. Last month, US airlines announced they would ban passengers who refuse to wear facial coverings, and United recently said it would increase air circulation on its planes during boarding and deplaning. But health officials say flying in the coronavirus era is unavoidably risky. And most would-be fliers are staying home. Airport traffic is still down more than 70% so far in July compared with a year ago, according to passenger screening data, CNN reported.
The International Civil Aviation Organization provided information about effects of Novel Coronavirus (COVID-19) on Civil Aviation
Economic Impact AnalysisThe latest estimates indicate that the possible COVID-19 impact on world scheduled passenger traffic for the full year 2020, compared to Baseline (business as usual, originally-planned), would be:
– Overall reduction ranging from 42% to 52% of seats offered by airlines
– Overall reduction of 2,369 to 2,947 million passengers
– Approx. USD 316 to 390 billion potential loss of gross operating revenues of airlines.