United Airlines Has ‘Most Difficult’ Quarter Ever; $1.6B Net Loss

NEWARK, NJ — United Airlines saw the “most difficult financial quarter in its 94-year history” because of the coronavirus, the company announced Tuesday.

United, which maintains a hub at Newark Airport, reported a second quarter net loss of $1.6 billion and an adjusted net loss of $2.6 billion. Total operating revenues were down 87.1 percent year-over-year, on an 87.8 percent decrease in capacity year-over-year, spokespeople stated.

The company's total liquidity as of the close of business on Monday was roughly $15.2 billion. United now expects liquidity at the end of the third quarter to be more than $18 billion.

“I am grateful for the professionalism and dedication of our United team members who persevered through an historic and challenging period to deliver for our customers,” CEO Scott Kirby said.

“While this unprecedented crisis has been difficult for our team, we expect United produced fewer losses and lower cash burn in the second quarter than any of our large network competitors,” Kirby said.

“We accomplished this by quickly and accurately forecasting the impact that COVID would have on passenger and cargo demand, accurately matching our schedule to that reduced demand, completing the largest debt financing deal in aviation history, and cutting expenses across our business,” Kirby continued.

“We believe this quick and aggressive action has positioned United to both survive the COVID crisis and capitalize on consumer demand when it sustainably returns,” Kirby added.

Earlier this month, United spokespeople said that passenger volumes have begun trending slightly upward from April. However, the July scheduled capacity is expected to be down 75 percent compared to last year, and company executives expect August’s scheduled capacity to be down 65 percent.

Given the recent resurgence of COVID-19 cases across the country, it's increasingly likely that travel demand will not return to normal until there is a widely available treatment or vaccine, United spokespeople stated.

THOUSANDS OF POTENTIAL LAYOFFS

United Airlines received roughly $5 billion in emergency aid from the federal government through the payroll support program of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. But the funds may not save the jobs of tens of thousands of its workers.

Earlier this month, United Airlines spokespeople said nearly 36,000 of its frontline employees will be notified about potential furloughs on Oct. 1 under the Worker Adjustment and Retraining Notification Act (WARN).

"Importantly, not everyone who receives a WARN notice will be furloughed," United spokespeople said. "We expect to offset these numbers through increased participation in new and existing voluntary programs as well as continued discussions with our union partners about creative ways to help reduce furloughs."

United Airlines has emphasized that its frontline workers aren't the only ones feeling the financial pain; its management and administrative teams have also been seeing a reduction in hours.

• See related article: United Airlines May Lay Off 36K Despite $5 Billion In Federal Aid

‘MITIGATING THE IMPACT’

In addition to the CARES Act, United Airlines has been taking several steps to help lessen the financial blow of the virus.

Since the start of the crisis, the company has raised a total of $16.1 billion through debt offerings, stock issuances and the CARES Act Payroll Support Program grant and loan, among other items, spokespeople said.

According to the company, other steps have included:

• Reduced total operating costs by 69 percent versus the second quarter of 2019
• Increased cargo revenue by 36.3 percent by serving strategic international cargo-only missions and optimizing aircraft capacity with low passenger demand
• As of July 2, raised $6.8 billion in financings secured against MileagePlus Holdings in the form of a $3.8 billion bond and a $3.0 billion term loan, with interest rates of 6.5 percent and LIBOR plus 5.25 percent, respectively
• Offered employees comprehensive voluntary separation packages including flight benefits and continuous pay through Nov. 30, 2020 with more than 6,000 employees opting to participate

CLEANING, FACE MASKS AND AIR FILTERS

The company has also been striving to restore passengers’ confidence in air travel.

This week, the company announced it will now maximize air flow volume for all mainline aircraft high-efficiency particulate air (HEPA) filtration systems during the entire boarding and deplaning process, helping further reduce the spread of COVID-19.

According to United, other new policies have included:

• Launched United CleanPlus, to reinforce the company's commitment to putting health and safety at the forefront of the entire customer experience, with the goal of delivering an industry-leading standard of cleanliness by partnering with Clorox and experts from the Cleveland Clinic.
• Require all United flight attendants and passengers to wear face coverings.
• Among first U.S. airlines to enforce policy that bans customers for refusing to follow mask requirements.
• First major U.S. airline to ask all passengers to complete a health self-assessment during their check-in process based on recommendations from the Cleveland Clinic.
• As of July 1, all U.S. airports are electrostatic spraying aircraft interiors.
• Expanded touchless check-in capabilities to kiosks at more than 215 airports.
• The company offers free COVID-19 testing to all employees, and checks their temperatures before they begin work at all U.S. airports.
• In May, started providing individually wrapped hand wipes and snack bag with pretzels, Stroopwafel, water, and a hand sanitizer wipe as customers board to reduce touchpoints.

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