United Airlines Holdings Inc. (NASDAQ:UAL) woes are far from over, having reported a consecutive quarterly loss hurt by the COVID-19 pandemic. With the pandemic showing no signs of fading away, things are not looking good for the company, banking on vaccine rollout.
Disappointing results
While United Airlines and other airlines are banking on COVID-19 vaccines to boost travel demand, the same depends on the pace of roll out as cases keep rising amid new variants. The Chicago-based airline sank in the market after saying it cannot predict when demand in the travel industry will positively impact results.
The remarks came as the airline sank to a consecutive loss of $2.1 billion in the fourth quarter. Operating revenues plunged 69% to $3.4 billion as the all-in cash burn rate worsened to $33 million a day.
Faced with spiraling costs, the airline has embarked on a cost-cutting drive as it looks to save at least $2 billion in structural reductions. The airline ended the fourth quarter with $19.7 billion in available liquidity.
United Airline Outlook
In the first quarter, United Airlines expects revenue to decline by 65% to 70% from a year ago, slightly worse than the 47% decline projected by analysts. Q1 capacity is also seen down 51% year over year. Q1 should not be any different to Q4 with the inflection in the travel industry expected in the second half of the year. Recovery could happen based on vaccine rollouts and their impact.
Amid the disappointing Q4 results, the Chicago-based airline expects 2021 to be a transition year as COVID-19 vaccines come into play. The airline has already resumed heavy maintenance and engine overhauls. It is also making all the necessary investments that are essential should a recovery of the travel industry result in pent-up demand.
United Airlines is also banking on a combination of structural cost reduction and timely investments to spearhead a recovery from current levels.