Apr 30, 2020
United Airlines sees cash burn easing on virus-era cost cuts
Amanda Lang: United's exec pay cut a misguided response to COVID-19
United Airlines Holdings Inc. will wrestle its average daily cash burn down to no more than US$45 million in the second quarter as the carrier braces for a prolonged travel slump due to coronavirus.
That would be less than half the amount United was going through in March, as the coronavirus pandemic all but erased travel demand and prompted mass cancellations by customers. Delta Air Lines Inc. is cutting cash usage to US$50 million a day, while American Airlines Group Inc. is targeting the same amount by the end of this quarter.
Like other airlines, United is trying to ride out the worst crisis in the industry’s history as passenger totals fall more than 90 per cent in the U.S. alone. The company said it had a US$9.6-billion pile of cash and short-term assets as of Wednesday, not including a potential U.S. government loan of US$4.5 billion. United has already lined up US$5 billion in payroll assistance from the Treasury Department to U.S. carriers.
United recorded an adjusted loss of US$2.57 a share in the first quarter, a smaller shortfall than the US$3.37 average of analyst estimates compiled by Bloomberg. Sales dropped 17 per cent to US$7.98 billion, the carrier said in a statement Thursday, affirming preliminary results it released April 20 in a regulatory filing.
The shares advanced 2.1 per cent to US$30.20 after the close of regular trading in New York. United has tumbled 66 per cent percent this year, the most on a Standard & Poor’s index of major U.S. carriers.