United loses $1.6 billion in 2nd quarter

United Airlines, reporting on what it called “the most difficult financial quarter in its 94-year history,” said Tuesday it lost $1.6 billion for the three months ending June 30 and is gradually reducing a cash burn of around $40 million per day.

Adjusted to exclude special items, the second-quarter loss totaled $2.6 billion.

The Chicago-based airline, which has said it will cut about 45% of its domestic workforce, insisted it is managing its business better than other major carriers in the wake of the travel industry’s collapse due to COVID-19. United said revenue during the second quarter fell 87% from the same period last year to $1.48 billion.

It said that by the end of the current quarter, it expects to reduce its daily cash burn rate to about $25 million.

CEO Scott Kirby said the results are dire but will beat those of competitors. “We accomplished this by quickly and accurately forecasting the impact that COVID would have on passenger and cargo demand, accurately matching our schedule to that reduced demand, completing the largest debt financing deal in aviation history, and cutting expenses across our business,” he said.

“We believe this quick and aggressive action has positioned United to both survive the COVID crisis and capitalize on consumer demand when it sustainably returns.”

United warned July 8 that it may furlough up to 36,000 of its frontline workers in the U.S. on Oct. 1. While it is offering buyouts to workers who want to leave voluntarily, the company said Tuesday only 6,000 have taken the deal. It has a tentative furlough agreement with its pilots union.

The net loss amounted to $5.79 a share and compares with a second-quarter profit of $1.47 billion, $4.02 a share, a year ago. The adjusted net loss was $9.31 a share, and was slightly ahead of expectations of analysts polled by Zacks Investment Research. The airline’s revenues also were slightly higher than expectations.

Executives are due to discuss the results in a conference call with analysts Wednesday morning.

United said the company’s liquidity totals about $15 billion, bolstered by more than $16 billion in debt offerings, stock issuances and grants and loans under the federal CARES Act.

The company said its operating capacity was down 88% from the second quarter of 2019.

It said it expects to operate at 35% of capacity during the current quarter and will continue to evaluate and cancel flights on a rolling 60-day basis until it sees demand perk up. But the company said it expects passenger loads to be reduced until there is a widely available treatment or vaccine for COVID-19.

Last week, Delta Air Lines reported a $5.7 billion loss for its second quarter. American and Southwest airlines are due to report results Thursday.

In Tuesday’s trading, United shares finished at $33.07, up 2.3% for the day, and shares rose slightly in after-market business. United announced its earnings after the market’s close.