United Airlines said it lost $1.63 billion in the second quarter Tuesday, caused by a huge drop in demand for air travel due to the ongoing global health turmoil. The carrier reported a profit of $1.05 billion for the same period in 2019.
Revenue was down to $1.48 billion in the three months ended June 30, falling from $11.4 billion in the same period last year by 87 percent. The sharp collapse in sales was not as bad as expected, exceeding estimates from analysts at $1.32 billion.
The Chicago-based airline and other major carriers who have been developing their networks for years are struggling with what is predicted to be a long-lasting shockwave from the pandemic.
Adjusted for one-time items, the company said it shed around $2.5 billion, or $9.31 per share, against an adjusted profit of $4.21 per share from the previous year. Analysts surveyed by FactSet had estimated the carrier to post an adjusted loss of $8.96 per share on $1.3 billion revenue.
United had $15.2 billion in liquidity as of July 20 and reiterated its outlook for liquidity to breach the $18 billion mark at the end of September as the company taps extra funding.
United pointed out in a media release that it has been able to reduce the rate at which the group burns through cash, even as several of its commercial aircraft remain grounded and ticket sales have plummeted. United is losing $40 million each day, the company revealed on Tuesday, down from $100 million last April.
The carrier stated that it sees its daily cash losses to drop to $25 million in the next three months. Investors cautioned they were not shocked by the company's results: United stock had moved up 2 percent higher during trading hours but remained unchanged in extended sessions.
United Airlines stressed that its flight capacity in the third quarter will likely decline around 65 percent compared with the same period last year. The carrier, which is not blocking middle seats, is estimating a load factor of around 45 percent in July. Its passenger aircraft flew roughly one-third full in the first half.
A recovery in aviation is hounded by an increase in COVID-19 infections across the U.S. and isolation orders for travelers arriving from a host of states to New Jersey, New York, Connecticut, and elsewhere.
United's cash burn during the quarter included $3 million in principal payments and separation expenses, the group said. It predicts its average daily cash losses to include $6 million of principal repayments and severance expenses.
