Despite raising over $22 billion from debt offerings and government financing, United Airlines announced an adjusted net loss of $2.4 billion in the quarter ending Sept. 30, 2020. As the COVID-19 pandemic continues to ravage communities around the world, leaders at the airline now predict the aviation industry may not recover until 2024 at the earliest.
United used their third quarter 2020 report to tout “stronger results than those that will be achieved by each of our legacy competitors.” But the carrier still reported an adjusted net loss of $2.4 billion for the three-month operational period ending Sept. 30, 2020, underscoring the continued issues the COVID-19 pandemic is creating for airlines around the world.
Leadership Predicts Aviation Won’t Come Back Until 2024
To maintain their bottom line, United got creative to keep $19.4 billion in liquidity available at the end of the quarter. The airline raised $22 billion through debt offerings, stock issuance and funds available from the CARES Act. In addition, United was the first of the three legacy carriers to borrow against their frequent flyer program, MileagePlus.
However, the airline also let go of over 10,000 employees on Oct. 1, 2020, when the Payroll Support Program funds ran out. An additional 9,000 employees participated in voluntary separation packages, retirement packages and extended leave of absence options. The average daily cash burn was $21 million, plus $4 million of average debt principal payments and severance payments per day.
In total, operating revenues were down 78 percent compared year-over-year, while the carrier reduced overall capacity by 70 percent in the quarter. But despite all the downturns, United leadership expects to be the airline of choice for business travel once the COVID-19 pandemic comes to an end.
“When we emerge, particularly given our seven hubs…given everything that we’re doing to invest in the customer experience, eliminating change fee, everything that we’re doing with our loyalty program, we’re going to emerge as the world’s number one business class airline,” airline chief executive Scott Kirby said during the third quarter results call. “I think it’s 2024 before it all comes back. But in that world too, I think we will have picked up share, frankly.”
In regards to the customer experience, United was quick to tout they were the first among the legacy carriers to cut change fees on most domestic tickets, and create interactive maps to help travelers determine where they could travel. The airline will also continue to install their luxury United Polaris cabin aboard their fleet of Boeing 787 Dreamliners.
United Becomes Second Carrier to Post Major Losses in Third Quarter
With their announcement, the Chicago-based carrier was the second airline in the week to post a major loss for the fall operations period. On Oct. 13, 2020, Delta announced a $6.9 billion loss in the third quarter, all of which was attributed to the current pandemic conditions.