United Airlines: Most Difficult Financial Quarter in its History
Impact of COVID-19 on Quarter 2 Results
United Airlines (UAL) today announced the most difficult financial quarter in its 94-year history. The airline’s second quarter 2020 financial results show a net loss of $1.6 billion, and an adjusted net loss of $2.6 billion.
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 Airlines 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. We accomplished this by quickly and accurately forecasting the impact that COVID would have on passenger and cargo demand, accurately matching our schedule to that reduced demand, completing the largest debt financing deal in aviation history, and cutting expenses across our business. We believe this quick and aggressive action has positioned United to both survive the COVID crisis and capitalize on consumer demand when it sustainably returns.”