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United Reports $7.7 Billion Full-Year Adjusted Net Loss, Looks Forward to 2023

United Reports $7.7 Billion Full-Year Adjusted Net Loss, Looks Forward to 2023
Joe Cortez

United Airlines doesn’t expect they will return to pre-COVID profit levels until 2023, after releasing their full-year 2020 financial reports. The Chicago-based airline posted a 2020 adjusted net loss of $7.7 billion, but ended the year holding $19.7 billion in liquidity.

United Airlines now says recovery won’t come for another two years, and will adjust their business to focus on 2021 as a transitional year. The Chicago-based carrier announced a 2020 full-year adjusted net loss of $7.7 billion, acknowledging the COVID-19 pandemic as “the most disruptive crisis in aviation history.”

United Treats 2021 as a Transition Year, Looking For Full Recovery by 2023

Despite United working with the Commons Project Foundation on a health passport app combined with the start of COVID-19 vaccinations in the United States, the carrier does not expect travelers to return to the skies in the coming year. Instead, airline executives say they don’t plan on beating 2019 earnings for another two years.

For 2021, United is planning to work on a transitional plan to achieve profitability by 2023. This includes maintenance on their current fleet, while reducing costs across the company.

“United has resumed heavy maintenance and engine overhauls, investments that are essential to recovery when demand returns. The combination of structural cost reduction and timely investments will help set up United to exceed its 2019 adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin in 2023,” the airline said in a press release. “The company expressed high confidence that it would achieve this target by 2023 – and said its ongoing recovery planning would help ensure the company was equipped to reach this level even sooner, if demand returns more quickly.”

In 2020’s fourth quarter alone, the carrier posted a total operating revenue of $3.4 billion, a drop of 9 percent compared to the same tine in 2019. However, the lack of flights also reduced operating expenses by 45 percent compared to the 2019 fourth quarter. The airline was able to also reduce their core cash burn to $19 million per day, an improvement of $5 million compared to the previous quarter. When average debt principal payments and employee severance payments are included, the cash burn rate increases by $10 million per day.

Even though the quarter was difficult for United, they still have plenty of achievements to tout for the time period. The carrier launched the first COVID-19 testing operation for all flyers departing for Hawaii from San Francisco International Airport, and successfully leveraged the MileagePlus loyalty program to secure an additional $6.8 billion loan.

United Results Continue Parade of Dismal Results from 2020

The United full-year financial report continues the trend of depressing financial results from air carriers. Delta Air Lines reported a drop of $15.6 billion in 2020, leading off the reporting season for airlines. In after-hours trading, United’s stock trended downward on the news of the total loss.

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