United reports another loss, but thinks better times are just ahead

Apr 20, 2021

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

United Airlines posted a $1.36 billion loss for the first quarter of 2021, its fifth consecutive quarterly loss as the novel coronavirus pandemic continues to ravage the global airline industry.

But despite the loss, the airline was upbeat and optimistic on Tuesday as it shared the up-side: the losses are close to an end.

Want more airline-specific news? Sign up for TPG’s free new biweekly Aviation newsletter!

The airline said that it was cashflow-positive for the month of March, despite averaging a $9 million daily cash burn for the quarter overall — an improvement from $19 billion in the fourth quarter of 2020. Based on current trends, it does not expect to dip into negative cash flow again.

“We expect core cash flow to remain positive going forward,” Gerry Laderman, United’s chief financial officer, on an earnings call with analysts Tuesday morning. “We are excited to reach this milestone and no longer expect to discuss cash burn metrics moving forward.”

“This confirms the view that we first shared in October, 2020, that we could see a light at the end of the tunnel,” United CEO Scott Kirby said.

The recovery thus far has been led by a boom in both close-in and longer forward bookings as the pace of vaccination in the U.S. has accelerated. As Americans continue to become more optimistic over the state of the pandemic domestically, airlines expect that trend to continue.

Still, despite the rebound in domestic and regional leisure demand — which has led the airline to predict an average load factor in the 80% range starting in June — the airline is not quite at profitability yet.

Business and long-haul international travel demand remains down more than 80%, Kirby said. The airline expects to be able to reach net-positive income by the time those segments get to the point that they’re down just 35% of 2019 levels.

Uncertainty about business and long-haul travel led United’s stock to tumble more than 9% by Tuesday afternoon, compounded by the U.S. State Department’s decision to add most of the world’s countries to its Level 4 “do not travel” advisory.

“The big question is when do those two things come back and we’re not certain of when that is,” Kirby said on CNBC earlier Tuesday morning.

However, airline executives say they’ve seen hopeful signs of pent-up demand from travelers simply waiting for the go-ahead. United has added routes to countries that have begun to reopen including Greece, Croatia and Iceland, and passengers have shown a strong interest.

“We have seen in recent weeks that immediately after a country provides access with proof of a vaccine, leisure demand returns to the level of 2019 quickly,” Andrew Nocella, the airline’s Chief Commercial Officer, said on Tuesday’s call. “A few weeks ago there was a rumor Greece was going to open. As soon as that rumor occurred, Greece bookings took off. Athens is our second-best booked Atlantic market this summer.”

Nocella added that the airline has capacity reserved to dedicate to reopening long-haul markets, specifically citing the rumored possibility of a travel corridor between the U.S. and UK.

Related: Airlines push for U.S./U.K. travel bubble

“We have the aircraft standing by, ready to fly this summer,” he said. “For example, we anticipate operating between eight and ten daily flights to London Heathrow this summer, if and when a travel corridor is permitted to open.”

Still, Nocella and the other United executives pointed out, things are not yet back to normal.

“To be clear, business traffic recovery so far — given where we are — a full schedule is not warranted in the coming months.”

Featured photo by DANIEL SLIM/AFP via Getty Images

Chase Sapphire Preferred® Card

WELCOME OFFER: 80,000 Points

TPG'S BONUS VALUATION*: $1,650

CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
  • Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
  • With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
  • Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
  • Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.
Regular APR
15.99%-22.99% Variable
Annual Fee
$95
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit
Excellent/Good

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.