AP – United Airlines said on Wednesday that it finished one of the worst years in its history by losing USD1.9 billion in the last three months of 2020, and it predicted more of the same in the first quarter of this year.
The loss was wider than analysts expected. The number of United States (US) airline passengers had been building slowly since May but was hammered again when COVID-19 cases began surging in the fall, causing health experts to beg people to stay home.
United lost USD7.1 billion in 2020, an amount exceeded only in 2005, when bankruptcy-related costs pushed the company to a USD21 billion loss. Including debt and severance payments, the airline burned through USD33 million in cash per day.
Revenue plunged 69 per cent in the fourth quarter compared with a year earlier. United predicted a similar decrease — between 65 per cent and 70 per cent — 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.
Chicago-based United tried to reassure investors that it is laying the groundwork for a gradual recovery once the coronavirus outbreak is contained.
United said that it starting to cut USD2 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.”