United Airlines loses $2B in first reported US airline coronavirus-crisis losses
United Airlines plummeted to a more than $2 billion loss in the first quarter, erasing more than half of its entire 2019 profit as the novel coronavirus pandemic has destroyed nearly all demand for air travel.
The Chicago-based carrier lost $2.1 billion before taxes during the three months ending in March, United disclosed in a securities filing Monday. Put another way, the loss is more than half of its $3.9 billion pre-tax profit in all of 2019 -- a strong year for many U.S. carriers.
The result is the first reported loss for the period among the U.S. carriers but it is not expected to be the last.
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Airlines are struggling to stay solvent. Carriers across the country, and around the world, have tapped many of their available credit lines to raise cash to pay many of their fixed costs including staff, aircraft rents and debt payments.
The U.S. Treasury is awarding some $25 billion in payroll assistance to airlines to help mitigate the losses. United has said it will accept $5 billion from the bailout program, which is part of the $2 trillion CARES Act.
In addition, United said Monday that it has applied for a separate $4.5 billion loan from the Treasury from a separate $25 billion CARES Act pot aimed at alleviating U.S. airlines' other fixed expenses.
United is not only relying on the government for assistance. It raised funds from BOC Aviation, a Singapore-based aircraft leasing company, by selling the firm 22 aircraft over the weekend. The deal, known as a "sale-and-leaseback" where an airline sells a plane to a lessor and immediately leases it back, is common fund-raising structure for airlines but something that United rarely taps.
Related: US airlines’ first bailout aid was tougher to get and came with more strings than expected
U.S. carriers have hundreds of aircraft that they own outright with no attached mortgages. They can use these planes as collateral for new loans or bonds, or for sale-and-leaseback transactions like the deal United inked with BOC Aviation.
New sources of funds are key for airlines to avoid running out of cash as flyers have all but disappeared in COVID-19 America. Traveler screenings at U.S. airports has hovered below 5% of last year's numbers for over a week, according to data from the Transportation Security Administration. The numbers include some airline crewmembers.
In an April 15 letter, United CEO Oscar Munoz and president Scott Kirby said that during the first two weeks of April the airline carried just 3% of the six million people it flew during the same period a year ago.
"We expect to fly fewer people during the entire month of May than we did on a single day in May 2019," they said.
Related: United Airlines warns staffing cuts to come as it slashes May flying by 90%
Airlines have culled capacity in an effort to stem losses. Data from industry group Airlines for America (A4A) shows U.S. carriers had cut capacity by 76% year-over-year during the week ending April 14. However, even with the cuts airlines were reporting on average fewer than 10 people on every flight.
United will cut capacity by 90% in May. It plans to extend those cuts into June in a signal that it does not expect travelers to resume flying anytime soon.
Carriers have also asked staff to take unpaid leave. Tens of thousands of staff members at carriers including Delta Air Lines and United have already availed themselves of such packages, however, executives warn that come Oct. 1 -- the day after CARES Act protections on involuntary furloughs and layoffs lift -- airlines may have to make significant workforce cuts.
Wall Street analysts are forecasting that U.S. airlines will be 25% to 30% smaller by year-end than they were at the end of 2019.
Delta and Southwest Airlines are scheduled to release their first quarter earnings this week on April 22 and 23, respectively.
Related: How will airlines rebuild their route maps after the coronavirus?
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Intro offer
Annual Fee
Recommended Credit
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
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- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
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- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.
Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
| 2X | Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com. |
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Intro Offer
You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.