UA slides to $1.9bn loss in 4Q-2020Europost
The carrier United Airlines announced a mounting pandemic driven loss for the last quarter of 2020, AP reported. The loss peaked at $1.9 billion and paves for similar financial results in the first three months of 2021. Experts had expected a much smaller by volume loss.
The number of US airline passengers had been growing building slowly since May but was hammered again when Covid-19 cases began rising in the autumn. Americans were advised to stay home, postpone or cancel pending travels.
UA lost $7.1 billion in 2020, an amount exceeded only in 2005, when bankruptcy-related costs pushed the company to a $21 billion loss. Including debt and severance payments, the airline burned through $33 million in cash per day.
Revenue plunged 69% in the fourth quarter compared with a year earlier. United predicted a similar decrease - between 65% and 70% - in the first quarter of 2021, a slightly more pessimistic view than the one expressed by Delta Air Lines last week.
Analysts believe that Americans who have been cooped up since March are eager to travel again once it is safer. But the slow pace of vaccinating Americans against Covid-19 and concern about new variants of the virus are hurting airline bookings.
UA said that it starting to cut $2 billion in annual structural costs from its operations. At the same time, the airline expressed confidence that crucial business travel will eventually bounce back, although not as quickly as leisure travel.
The combination will result in higher profit margins in 2023 than United saw in 2019, before the pandemic, the company predicted.
“Aggressively managing the challenges of 2020 depended on our innovation and fast-paced decision making,” CEO Scott Kirby said in a statement. “But, the truth is that COVID-19 has changed United Airlines forever.”
Revenue tumbled to $3.41 billion, nearly matching the $3.42 billion that was forecast by analysts. Revenue from international flights plunged 83%, compared with a 72% drop in domestic revenue.