United reports $2.1 billion pretax loss amid coronavirus crisis
In the initial documents filed with the United States Securities And Exchange Commission (SEC), United Airlines reported a $2.1 billion loss for the first quarter of 2020, as it faces the impact of low travel demand due to the coronavirus pandemic.
The carrier reported $8.0 billion in total revenues, a 17% year-on-year decline. It recently applied for state aid and should receive about $5 billion out of the $25 billion the government plans to allocate to airlines through the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. That money will be partly dedicated to keeping the company airborne throughout the summer. However, it warns that the sum will not be sufficient to completely cover payroll expenses, which account for 30% of the airline’s total costs.
United, which already secured $2.75 billion in new credit, plans to borrow up to approximately $4.5 billion from the U.S. Treasury Department.
Like other U.S. carriers, United will not start reducing its workforce and cutting wages before October 2020, a delay that conditioned the grant of the stimulus package. The company employs nearly 100,000 people.
"The demand for travel is close to zero and shows no signs of improvement in the short term," explained CEO Oscar Munoz and President Scott Kirby in an email to their employees, adding “less than 200,000 people flew with us during the first two weeks of April this year, compared to more than 6 million during the same time in 2019”. The airline expects to fly fewer passengers throughout the whole month of May 2020 than it did in a single day of May 2019.
The final financial report for the first quarter period is expected on April 28, 2020.
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