United Airlines today announced third-quarter 2020 financial results. Since the beginning of the crisis, the company has been at the forefront of the industry in delivering on its three-pillar strategy of building and maintaining liquidity, minimizing cash burn and variabilizing its cost structure. Achieving these objectives has supported the airline’s ability to manage the crisis as well as or better than its competitors and positions United to lead the industry when demand for air travel returns.
In addition, United expects
that third-quarter revenue performance will be the best, even in a historically
difficult environment, among our large network competitors – once they have all
reported their quarterly results. By almost any revenue measure, the company
expects on a year-over-year basis, with our total unit revenue of down 26
percent, passenger unit revenue of down 47 percent, cargo revenue of up 50
percent and loyalty revenue of down 45 percent to be stronger results than
those that will be achieved by each of our legacy competitors.
“Having successfully
executed our initial crisis strategy, we’re ready to turn the page on seven
months that have been dedicated to developing and implementing extraordinary
and often painful measures, like furloughing 13,000 team members, to survive
the worst financial crisis in aviation history,” said United CEO Scott
Kirby. “Even though the negative impact of COVID-19 will persist in the
near term, we are now focused on positioning the airline for a strong recovery
that will allow United to bring our furloughed employees back to work and
emerge as the global leader in aviation.”
United
CleanPlus: Keeping Our Customers and Employees Safe
- Partnered
with the Defense Advanced Research Projects Agency (DARPA) to study how
effectively the unique airflow configuration on board an aircraft can
prevent the spread of aerosolized particles among passengers and crew. - Only airline
maximizing ventilation systems by running the auxiliary power on mainline
aircraft during the entire boarding and deplaning process, so our
customers and crew get the important safety benefits provided by
high-efficiency particulate air (HEPA) filtration systems. - First U.S.
airline to announce the launch of a COVID-19 pilot testing program for
customers traveling on United from San Francisco International Airport
(SFO) to Hawaii. - Added Zoono
Microbe Shield, an EPA-registered antimicrobial coating that forms a
long-lasting bond with surfaces and inhibits the growth of microbes, to
the airline’s already rigorous safety and cleaning procedures and expects
to add the coating to the entire mainline and express fleet before the end
of the year. - Since
COVID-19 began, first major U.S. airline to require flight attendants to
wear masks onboard, and among first to require all customers to wear masks
onboard. In the third quarter, extended mask requirements to require
customers to wear a face covering in the more than 360 airports where
United operates around the world, including United customer service counters
and kiosks, United Club locations, United’s gates, and baggage claim
areas. - Launched the
United Automated Assistant, a new chat function that gives customers a
contactless option to receive immediate access to information about
cleaning and safety procedures put in place due to COVID-19. - Began
cleaning pilot flight decks with Ultraviolet C (UVC) lighting technology
on most aircraft at hub airports to disinfect the flight deck interior and
continue providing pilots with a sanitary work environment.
Pillar
1 – Raising and Maintaining Liquidity
- Since March,
the company has raised over $22 billion through commercial debt offerings,
stock issuances and the Coronavirus Aid, Relief, and Economic Security Act
(“CARES Act”) Payroll Support Program grant and loan, among
other items. - The
company’s total available liquidity1 at the end of the third
quarter 2020 was approximately $19.4 billion. - Entered into
the first-of-its-kind loyalty backed transaction, borrowing $6.8 billion
secured against MileagePlus Holdings in the form of a $3.8 billion bond
and a $3.0 billion term loan. - Secured the
ability to borrow $5.2 billion with the U.S. Treasury under the CARES Act
loan program between now and March 2021 and expects to have the ability to
increase the borrowing capacity up to $7.5 billion, subject to government
approval. - Entered into
an agreement with CDB Aviation to finance, via a sale leaseback transaction,
two Boeing 787-9 and ten Boeing 737 MAX aircraft that are currently
subject to purchase agreements between United and The Boeing Company.
Pillar
2 – Minimizing Cash Burn
- Reduced
total operating costs by 59 percent versus the third quarter of 2019.
Excluding special charges2, reduced operating costs by 48
percent versus the third quarter of 2019. - Achieved
target average daily cash burn3 during the third quarter of $21
million plus $4 million of average debt principal payments and severance
payments per day, compared to second-quarter average daily cash burn of
$37 million plus $3 million of debt principal payments and
severance payments per day.
Pillar
3 – Variabilizing Cost Structure
- Reduced
non-labor operating expenses, excluding special charges and depreciation,
by 63 percent in the third quarter, against a capacity reduction of 70
percent. - Restructured
and significantly reduced our management and administrative functions.
These reductions are expected to be largely permanent, even as demand
recovers. - Reached a
landmark agreement with its pilot group that avoids furloughs by securing
flexibility in work hours, while also reaching agreements to provide a
path to early retirement and reduce expense through voluntary leave of
absence programs. These agreements position the company to rebound quickly
when demand returns. - Created a
program with the Association of Flight Attendants (AFA) that reduced 3,300
flight attendant furloughs while allowing the company to react more
quickly to network changes. - Reduced
furloughs of International Association of Machinists and Aerospace Workers
(IAM) represented employees through an agreement that incentivizes
employees to take a leave of absence. - Worked with
the union representing dispatchers to reduce furloughs and create staffing
flexibility as demand returns through an agreement that allows dispatchers
to voluntarily reduce their work schedules. - Offered
employees comprehensive voluntary separation packages, retirement packages
and/or extended leaves of absence with approximately 9,000 employees
opting to participate.
Third-Quarter
Financial Results
- The company
had a net loss of $1.8 billion, and an adjusted net loss4 of
$2.4 billion. - Total
operating revenues were down 78 percent year-over-year, on a 70 percent
decrease in capacity year-over-year. - Passenger
revenue was down 84 percent year-over-year.
Expanding
Customer Benefits
- First among
U.S. global airlines to permanently eliminate change fees on all standard
economy and premium cabin tickets for travel within the U.S., and starting
January 1, 2021, any United customer can fly standby for free on a flight
departing the day of their travel regardless of the type of ticket or
class of service. - First U.S.
airline to introduce the Destination Travel Guide, a new interactive map
tool on united.com and the United mobile app that allows customers to
filter and view destinations’ COVID-19 related travel restrictions. - First U.S.
airline to introduce an interactive map feature for customers on
united.com, powered by Google Flight Search Enterprise Technology, to
easily compare and shop for flights based on departure city, budget and
location type. Customers can simultaneously compare travel to various
destinations in a single search. - Announced
plan to continue installing Polaris Business Class on Boeing 787 fleet.
Reimagining
Our Route Network
- Announced 28
new domestic routes and 9 new international routes. - Resumed nonstop
service on 146 domestic routes. - Resumed
and/or launched service on 78 international routes to 33 destinations in
18 countries around the world, including: Aruba, Belgium, Brazil, Canada,
China, Costa Rica, Dominican Republic, El Salvador, French Polynesia
(Tahiti), Guatemala, Honduras, India, Ireland, Jamaica, Philippines,
Singapore, South Korea and Switzerland. - Compared to
June, United had nonstop service in 127 more domestic and 29 more
international markets in July, 157 more domestic and 57 more international
markets in August, and 151 more domestic and 80 more international markets
in September. - Announced
increased service to China from two to four weekly flights between San
Francisco and Shanghai’s Pudong International Airport. Once service resumes,
United will be the only U.S. airline flying to mainland China directly. - Announced
plans to expand global route network with new nonstop service to Ghana,
Hawaii, India, Nigeria, and South Africa. With these new routes, United
will offer more nonstop service to India and South Africa than any other
U.S. carrier and remain the largest carrier between the U.S. mainland and
Hawaii. - Announced
plans to add up to 28 daily nonstop flights this winter connecting
customers in Boston, Cleveland, Indianapolis, Milwaukee, New
York/LaGuardia, Pittsburgh, and Columbus, Ohio to four popular Florida
destinations. - Announced
plans to fly roughly 40 percent of its full schedule in October 2020
compared to October of last year. - Increased
cargo revenue by 50 percent by leveraging international flying and
deploying strategic international cargo-only missions.
Doing
Our Part to Help Fight COVID-19 Since Crisis Began
- Booked over
2,900 free flights for medical professionals to support COVID-19 response
in New Jersey/New York and California. - More than
19.2 million miles donated by MileagePlus members and 7.6 million miles
matched by United to help organizations providing relief during COVID-19. - Donated
nearly 1.2 million pounds of food from United Polaris lounges, United Club
locations, and catering kitchens to local food banks and charities. - Over 7,500
face masks were made from upcycled unused employee uniforms. - More than
800 gallons of hand sanitizer produced by United employees in San
Francisco for use by United employees. - Donated
15,000 pillows, 2,800 amenity kits, and 5,000 self-care products to
charities and homeless shelters. - More than
2.2 million pounds of food and household goods were processed by United
employees at the Houston Food Bank. - Flew more
than 146.8 million pounds of medical equipment and personal protective
equipment (PPE) and 3.1 million pounds of supplies to support military
troops. - More than
2,400 United employees worldwide have volunteered, with over 33,400 hours
served. - United began
flying a portion of its Boeing 777 and 787 fleet as dedicated cargo
charter aircraft, as of March 19, to transfer freight to and from U.S.
hubs and key international business locations. Since then, we have
operated over 6,500 cargo-only flights and moved over 223 million pounds
of a variety of goods. - Through a
combination of cargo-only flights and passenger flights, United has
transported more than 401 million pounds of freight, which includes 154
million pounds of vital shipments, such as medical kits, PPE, pharmaceuticals
and medical equipment, and more than 3 million pounds of military mail and
packages.
– eTurboNews | Trends | Travel News
