United Airlines Holdings Inc reported a first-quarter loss of $1.7 billion on Thursday, including charges against assets in Latin America that have weakened as the ongoing global health crisis ravages travel businesses around the globe.
As demand has virtually disappeared as a result of the pandemic, airlines like United have parked planes and cut flight schedules, causing them to cancel growth plans and turn their attention to saving cash.
The Chicago-headquartered United disclosed it had $9.6 billion in liquidity as of April 29, up from $7.2 billion at end of March, and that its financial misery in the second quarter will range from $40 million to $45 million a day.
The company and its rivals are facing a downturn of 95 percent in U.S. air travel, just as travelers typically brace for summer vacation. For airlines, the second and third quarters are usually the most profitable, but the coronavirus and shelter-in-place mandates are forcing customers to stay home.
According to United Airlines chief executive officer Oscar Munoz during an earnings release, while the airline is still in the midst of this turmoil, "we won't hesitate to make tough decisions we believe will ensure the long term success of the company."
American Airlines and United Airlines both announced significant losses due to the coronavirus outbreak on Thursday following the steep decline in revenue.
The two airlines, both receiving funding under the US$ 2.2 trillion federal CARES Act passed last month, highlighted attempts to minimize their cash burn and create capital to withstand what top airline officials have identified as the worst business environment in their lifetime.
The International Air Transport Association has predicted that the coronavirus would cause global carriers to lose US$314 billion in revenue this year.
Since the first quarter ended, the situation facing the airline industry has become more terrible: air travel in the U.S. remained down 95 percent from a year ago during April, given the sheer number of people inspected at the airports. "Never before has our industry faced such a major challenge," Doug Parker, President and chief executive officer of American Airlines, said.
United reported last week that its revenue in March's last two weeks was down $100 million from the same time a year ago. As demand remains incredibly small, it said it expects to terminate 90 percent of its flights in May.
United is currently set to get $5 billion in federal assistance and has sought for approval to get up to $4.5 billion more in loans.
