NEW YORK: United Airlines has revealed its full-year 2020 financial results. The carrier lost over $7 billion in the year, including a nearly $1.9bn loss for the end of the fourth quarter. The results cap off a difficult year, though it has a lot of hope going forward.
For the full year of 2020, the airline recorded a loss of $7.069 billion. This compares to a $3.009 billion net income for 2019. In the fourth quarter, United Airlines lost $1.897 billion. The airline’s cash burn for the fourth quarter was around $19 million per day. This was down from the $38 million per day from the second quarter and $24 million from the third quarter.
In terms of liquidity, the carrier raised over $26 billion in 2020, but it ended the year with $19.7 billion in liquidity. This includes the undrawn revolver and funds available under the loan program from the US Treasury Department.
Operating revenue for the year was down about 64.5% from 2019’s level to $15.4 billion. Operating expenses were down 44% at $21.7 billion. In terms of revenue, the airline’s brightest geographic region for the quarter was domestic, with $1.8 billion in revenue, though this was down 72% from the fourth quarter of 2019.
Compared to Delta Air Lines, United lost about $5 billion less in 2020 than the Atlanta-based competitor. Nevertheless, a $7.1 billion loss is still a staggering amount.
From the onset of the crisis, the carrier cut scheduled capacity for the year by 57%. In the first quarter of 2021, United is anticipating scheduled capacity to be down at least 51% versus the first quarter of 2019. The airline will continue to proactively evaluate and cancel flights on a rolling 60-day basis until there is a recovery in demand. The airline is now expecting demand to remain suppressed until the vaccine is widely distributed.
In 2020, the airline reduced its planned capital expenditures and has now reduced operating expenditures for 2021.
In early 2021, United and the US Department of Treasury entered into a Payroll Support Program Extension Agreement (PSP Extension Agreement), which will provide the airline a total of approximately $2.6 billion. In return, the airline has to recall its furloughed employees or those involuntarily terminated between October 1st, 2020, and January 15th, 2021. These recalls, however, may only be temporary. United also has to back-pay them.
In addition, the carrier is not allowed to use the money for anything beyond employee wages, salaries, and benefits. United cannot buy back shares or pay dividends until March 31st, 2022.
United will still need to be vigilant in 2021 as the carrier is not out of the woods yet. Demand remains weak, the vaccine rollout is taking time, and most countries are still closed off to tourists. United has to tough it out until then.
