In what the company called “the most difficult financial quarter in its 94-year history,” United Airlines posted nearly $1.6 billion in losses in its second quarter earnings report.
Total operating revenues were down more than 87% year-over-year, a difference of nearly $10 billion.
“It was historic for the airline industry for all the wrong reasons,” said United CEO Scott Kirby, who called his brand’s earnings report the “least bad” and most accurate compared to its competitors.
“United believes it did the best job of matching actual capacity to demand among its largest network peers,” according to a statement from United. “The company also expects to finish the quarter with the lowest average daily cash burn among large network carriers.”
It’s a slight aimed at its competitors such as American and JetBlue, which have expanded their flight offerings in hopes that there would be a burst of travel. Delta has already announced it will be withdrawing previously announced August flights because of the pandemic, especially in the Sun Belt. American and JetBlue have yet to post its respective earnings.
Even though the earnings are sobering—the increase in summer travel clearly hasn’t been enough to sustain a recovery for the industry—the losses total nearly $4 billion less than its competitor, Delta.
During the second quarter, United burned through an average $40 million a day, but expects that to get as low as $25 million in the coming quarter. Comparatively, Delta said its cash burn was roughly $27 billion this quarter.
United has managed to cut its operating expenses by 68.7%, a difference of more than $6.8 billion. Delta cut $4 billion, which represented 40% of its operating expenses.
In short, United is focused on cash burn, not market share, assuming that as long as the airline survives the pandemic, recovery will come. Until a vaccine is found, demand might rise to 50% and then plateau, said CFO Gerry Laderman. And that might not happen until late 2021, according to Kirby.
Additionally, “fewer than 30” passengers have been removed from United flights because of the company’s mandatory face mask policy.
The lone bright spot: United increased cargo revenue by 36%, proving that there was at least some cash to be found in the pandemic. Delta saw its cargo revenue fall 42%.
Unfortunately, it won’t be enough to save the avalanche of layoffs awaiting the industry come Oct. 1, when a federal agreement to not reduce staff lifts. It was reported that the airline could cut more at least 36,000 jobs this fall, but negotiations between labor leaders and United are ongoing.
“On Oct. 1, we are planning to be a smaller airline,” said United president Brett Hart.
So far, more than 6,000 United employees have already taken “voluntary separation packages.”