Having burned an average of $33 million per day in Q4 2021, United Airlines plans to cut up to $2 billion of annual costs through 2023 as it prepares for a recovery.
After facing its fourth straight quarterly net loss of $1.9 billion in 2021, from a $641 million profit over the same period in 2019, the airline plans to cut about $2 billion of annual costs through 2023. According to the latest financial report, the U.S. air carrier’s revenue fell 69% to $3.41 billion, below the estimated revenue of $3.44 billion. In total, United Airlines suffered a net loss of more than $7 billion in 2020, the largest net loss since 2005.
“Aggressively managing the challenges of 2020 depended on our innovation and fast-paced decision making. But, the truth is that COVID-19 has changed United Airlines forever,” quoted Scott Kirby, the CEO of United Airlines, in the financial report.
In addition, the financial report showed that the airline burned an average of $33 million per day in Q4 2021, including up to $10 million of severance and debt payments. In comparison in Q3 2021, United was burning cash approximately up to $25 million per day while having spent $4 million for debt service and severance payments to employees.
Meanwhile, United Airlines had $19.7 billion of liquidity as of December 31, 2020, and the company expects to have similar liquidity as for the end of March 2021. However, the air carrier may have a chance to strengthen its liquidity position as it is set to receive up to $2.6 billion in state payroll support through March 2021. Besides, United Airlines also expects to cut its cost by offering the staff to take voluntary leaves.
United Airlines forecasted that its capacity would decrease down by 51% in Q1 2021 in comparison to the same period in 2019.