United Airlines announced a $1.6 billion net loss for the second quarter, as the coronavirus upended the global demand for air travel.
Although substantial, United’s loss was significantly less than the $5.7 billion hit Delta reported.
United warned 36,000 employees of potential furloughs or layoffs as demand remains low.
United Airlines announced a net loss of $1.6 billion in the second quarter as the COVID-19 pandemic decimated air travel demand.
The loss came as the airline collected just $1.4 billion in revenue, an 87.1% drop over the same quarter in 2019, with capacity falling 87.8%.
However, there was a somewhat bright spot in the airline’s announcement: things were not nearly as bad as they could have been.
Delta Air Lines – the only other airline to have announced its second quarter performance – reported a net loss of $5.7 billion for the quarter.
An apparent reason for the discrepancy was that United reduced its operating expenses more than Delta, cutting them by nearly 69% compared to 2019, while Delta reduced them by just 40%.
United’s capacity, on the other hand, was just 15% lower than Delta’s for the quarter, suggesting that the cost savings came from more than just grounding flights.
United burned an average of $40 million in cash each day in the second quarter. In a press release, the airline said it expects cash burn to fall to $25 million per day in the third quarter.
“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,” United CEO Scott Kirby said in a press release.
“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.”
United said that travel demand was down about 93% compared to the same quarter in 2019 – the same decline Delta reported – while passenger revenues fell 93.5%. Revenue from carrying cargo was up about 36.3%, while other operating revenue declined 36.9%, from $621 million to $392 million.
A conference call with investors to discuss the earnings is scheduled for Wednesday at 10:30 a.m. ET.