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United Airlines Announces Fourth Quarter Earnings Results

A United Airlines Boeing 737-800 being brought into the maintenance hangar at Washington Dulles International Airport. (Photo: AirlineGeeks)

United Airlines concluded a difficult year by announcing its fourth-quarter earnings results on Wednesday.  Overall, the airline lost $7.069 billion in 2020, a drastic contrast from a $3 billion profit in 2019.  According to CNBC, this year marked the largest annual loss for United since 2005.

Cash Burn Down, but Revenue Issues Remain

During Quarter 4 of 2020, the airline lost $1.897 billion, compared to a loss of $1.841 billion in Quarter 3.  United Airlines had earnings per share (EPS) of -$7.00, lower than the Wall Street estimate of -$6.42 from SeekingAlpha in Q4.  Additionally, the Chicago-based carrier reported revenue of $3.41 billion, lower than the estimate of $3.47 billion in Q4.  These two statistics led United Airlines’ stock to fall 2.72% in after-hours trading.

On a positive note, United Airlines reduced its core daily cash burn slightly from $24 million in Q3 to $19 million in Q4.  However, the airline had increased debt principal and severance payments in Q4 by $10 million a day, compared to $4 million a day.  The company obtained $26 billion in liquidity, ending the year with $19.7 billion in liquidity, including funds from the CARES Act and revolver payments.

During the COVID-19 pandemic, United Airlines decreased its operating expenses by 45% compared to 2019, but had a 69% decrease in total operating revenue compared to 2019 levels.  The only bright spot for United was the increase in cargo revenue by 77% in the fourth quarter. Passenger-wise, domestic flying led the way with $1.8 billion in revenue.

On average, the airline had a 55.6% load factor on flights in the fourth quarter of 2020, including a 64.8% load factor on domestic flights and a 40.4% load factor on international flights.  During the full year, the Chicago-based company averaged a 60.2% load factor.

United Airlines’ CEO, Scott Kirby, stated, “Aggressively managing the challenges of 2020 depended on our innovation and fast-paced decision-making. But, the truth is that COVID-19 has changed United Airlines forever.  The passion, teamwork and perseverance that the United team showed in 2020 is exactly what will help us build a new United Airlines that’s better, stronger and more profitable than ever. I could not be prouder of – and more grateful to – this team, which is going to lead us there.”

Looking Into the Future

In the near future, United Airlines does not expect quick improvement.  For Q1 of 2021, the airline’s preliminary outlook shows a capacity decrease of 51 percent compared to 2019 and a total operating revenue decrease of 65-70 percent.

United Airlines plans for 2021 to be a “transition year”, which will position the carrier for earnings (EBITDA) margins to recover by 2023.  As part of this, the company will resume heavy maintenance and engine overhauls, in addition to structural cost reduction.  United Airlines stated that they could reach recovery levels earlier if demand increases.

Furthermore, the carrier touts the “reimagining of its route network” via the introduction of 43 domestic routes and ten international routes in 2020.  Currently, United Airlines plans to introduce 15 international routes in 2021.  Also, United will reintroduce service to New York-JFK in late February 2021, following a five-year absence from the airport.  

Other Airline Earnings

Recently, Delta Air Lines also reported its fourth-quarter earnings, capturing a pre-tax loss of $2.1 billion in the fourth quarter and a pre-tax loss of $12.39 billion over the fiscal year.  These numbers exceed United Airlines’ losses by $0.3 billion and $5.3 billion.  United Airlines’ has $3 billion more in liquidity, but $4 million more in daily cash burn.

American Airlines and Southwest Airlines will report their earnings on the morning of January 28.  The release of these earnings will determine which four of the largest airlines’ strategies were best suited for survival to date, but only time will tell which strategy builds a strong foundation for growth post-pandemic. 

Winston Shek


  • Winston Shek

    Ever since Winston was a toddler, he has always had a fascination for airplanes. From watching widebodies land at Washington Dulles to traveling the world, Winston has always had his eyes towards the skies. Winston began aviation photography in 2018 and now posts his photos occasionally on his Instagram account. He previously wrote for a blog. In his free time, Winston loves to play chess, do recreational activities, and watch sports. Looking into the future, Winston plans to service the aviation industry.

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