United Airlines lost $7 billion in 2020, and burned through $33 million per day in the fourth quarter. It says 2021 will be a 'transition year' that prepares it for recovery.
AP Photo/Mary Altaffer
- United Airlines lost a total of $7.1 billion in 2020.
- In a statement, the airline said 2021 would be a "transition year that's focused on preparing for a recovery."
- The company burned an average of $33 million per day in the fourth quarter and reported a net loss of $1.9 billion.
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United Airlines lost $1.9 billion in the fourth quarter of 2020, bringing its total losses for the year to $7.1 billion, according to a statement released Wednesday.
The Chicago-based airline said it aimed to cut about $2 billion of annual costs through 2023 as it charts a recovery from the coronavirus pandemic that drove its fourth straight quarterly loss.
Airlines are counting on COVID-19 vaccines to boost travel demand later this year, but warn that the strength of a rebound will largely depend on the pace of vaccine rollouts, particularly as coronavirus cases keep rising.
United Airlines said 2021 would be a "transition year that's focused on preparing for a recovery." Its shares fell 2% in after-hours trading.
The company burned an average of $33 million per day in the fourth quarter, including about $10 million of severance and debt payments, even as it continued to slash costs.
United Airlines furloughed thousands of employees last October when an initial round of payroll aid for airlines expired. It brought back those workers following a fresh $15 billion in payroll aid for the sector, but warned the recall could be "temporary" as travel demand remains depressed.
"COVID-19 has changed United Airlines forever," United Airlines' CEO Scott Kirby said in the statement.
The airline company is set to receive about $2.6 billion in payroll support through March, and said it expects to offer employees options like voluntary leave to reduce furloughs after that time.
United Airlines lost $1.8 billion in the third quarter - normally the busiest travel season of the year - as the coronavirus pandemic triggered. low demand for flights and travel restrictions.
Rival Delta Air Lines, which last week labeled 2021 a year of recovery, expected to halt its daily cash burn rate of about $12 million in the spring and does not expect any furloughs.
United has the greatest exposure of major US airlines to international travel, the sector hardest hit by the pandemic and the one likely to be the slowest to recover.
The newly sworn in US President Joe Biden plans to maintain a ban on travelers from Europe and Brazil that his predecessor, Donald Trump, had signed an order to lift beginning on January 26.
United Airlines' adjusted net loss was $2.1 billion, or a loss of $7 per share, in the fourth quarter ended December 31, compared with a profit of $676 million a year earlier. That missed analysts' estimates for a loss of $6.60 per share, according to IBES data from Refinitiv.
Total operating revenue fell 69% to $3.4 billion, in line with forecasts. In the current quarter, United Airlines said it expects revenue to fall by 65% to 70% from a year ago and its flight capacity to shrink by at least 51%.
The airline had $19.7 billion of liquidity as of December 31 and expects to have a similar amount at the end of March, it said.
However, its cost reduction plan positions it to exceed its 2019 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin - a key metric of profitability - in 2023, or sooner if demand returns more quickly, it said.
United will hold an investor call on Thursday, with focus on summer booking trends. But since US airlines have dropped fees for changing or cancelling flights, it has become more difficult to predict revenue based on bookings.
American Airlines and Southwest Airlines are due to report quarterly results on January 28.
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