Mar 20, 2020, 9:29 pm
Last edit by: WineCountryUA
Please do not modify or remove
In recent days a number of threads have started touching on the impacts on UA as a business going forward due to the travel disruption of COVID-19 --- including multiple Viability / Bankruptcy / Bailout discussions. While inconceivable a few months ago, UA (and all commercial airlines) is facing challenges that are uncharted.
This consolidated thread has been created by merging a number of existing threads that trend to address essentially the same subjects.
Some thread guidelines
-- This thread / forum is for discussing UA and the UA traveler, so please focus on UA in these discussions. Other forums exist to discuss other carriers or the industry in general -- we do just UA here.
-- This thread is for discussion of how UA gets from here to its future state.
-- All the standard FT rules apply. We will have a civil, constructive, collegial discussion -- even in these turbulent times.
-- While much of this will play out in the political arena, this forum is not the place for political / OMNI discussions. Please use threads in appropriate forums for that, such as Covid-19 US tax cuts or fiscal stimulus
-- Similarly, discussions of the evils / greed of corporations or other broad societal issues are out of scope, those are for OMNI -- let's stick to discussing UA, its past and its future here
-- Please do not start new threads on these topics in the UA forum. One reason for this consolidated thread was to minimize the redundant posts in separate threads. There is plenty of room in the scope of this thread to cover all aspects of these topics. (Note things like M&A, restructuring, ... would all be in scope).
-- Please once you have laid out your position, do not repetitively re-state that opinion. It is usually a better discussion if many participate vs a few dominating the thread
On behalf of the UA Moderator Team
WineCountryUA
In recent days a number of threads have started touching on the impacts on UA as a business going forward due to the travel disruption of COVID-19 --- including multiple Viability / Bankruptcy / Bailout discussions. While inconceivable a few months ago, UA (and all commercial airlines) is facing challenges that are uncharted.
This consolidated thread has been created by merging a number of existing threads that trend to address essentially the same subjects.
Some thread guidelines
-- This thread / forum is for discussing UA and the UA traveler, so please focus on UA in these discussions. Other forums exist to discuss other carriers or the industry in general -- we do just UA here.
-- This thread is for discussion of how UA gets from here to its future state.
-- All the standard FT rules apply. We will have a civil, constructive, collegial discussion -- even in these turbulent times.
-- While much of this will play out in the political arena, this forum is not the place for political / OMNI discussions. Please use threads in appropriate forums for that, such as Covid-19 US tax cuts or fiscal stimulus
-- Similarly, discussions of the evils / greed of corporations or other broad societal issues are out of scope, those are for OMNI -- let's stick to discussing UA, its past and its future here
-- Please do not start new threads on these topics in the UA forum. One reason for this consolidated thread was to minimize the redundant posts in separate threads. There is plenty of room in the scope of this thread to cover all aspects of these topics. (Note things like M&A, restructuring, ... would all be in scope).
-- Please once you have laid out your position, do not repetitively re-state that opinion. It is usually a better discussion if many participate vs a few dominating the thread
On behalf of the UA Moderator Team
WineCountryUA
UA's Viability / Financial Future due to the COVID-19 Era [Consolidated]
Dec 14, 2020, 2:20 pm
#1066
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Wonder if the deal Aeroplan just announced with Chase UR will siphon any UA MP elites, at least at the margins.
Let's see, if it's still true, after the temporary MP qualification levels are gone, that AC flights can earn more PQP than UA's own flights, the last thing they need was an enticement of transferring UR to Aeroplan.
Let's see, if it's still true, after the temporary MP qualification levels are gone, that AC flights can earn more PQP than UA's own flights, the last thing they need was an enticement of transferring UR to Aeroplan.
Personally, I have no interest in any co-branded airline credit card due to its limited earning potential, and it locks you into one program.
Side note, I am still waiting for my award taxes/fee refund from Air Canada cancelled in April 2020. Grass is not greener on the other side...
Dec 15, 2020, 7:38 pm
#1067
Join Date: Aug 2020
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UA now expects average daily cash burn to rise to between $34 million & $36 million
Cash burn accelerates again
Two months ago, United Airlines reported average daily cash burn of $25 million for the third quarter, including average debt principal and severance payments of $4 million per day. That marked an improvement from cash burn of $40 million per day in the second quarter.Entering Q4, management expected daily cash burn to average $25 million to $30 million for the period, including debt principal and severance payments averaging $10 million per day. However, the COVID-19 pandemic has taken a turn for the worse since October. Last month, United was one of several airlines to report a slowdown in air travel demand and bookings. However, at the time, the company stuck by its initial cash burn forecast for the quarter.
In an investor update issued last Friday, United acknowledged that booking trends had continued to deteriorate. As a result, the company now expects revenue to plunge 70% year over year this quarter, compared to its prior guidance for a 67% revenue decline.
More importantly, United now expects average daily cash burn to rise to between $34 million and $36 million this quarter. That still includes $10 million per day for debt principal and severance payments. The increase in projected cash burn was driven in part by a shift in the timing of certain cash flows -- which shouldn't be a concern for investors -- but also by the drop in booking activity.
Digging a deeper hole
Prior to the recent guidance update, United Airlines had expected to end the year with nearly $19 billion of liquidity. Factoring in the new forecast for higher cash burn, the company's year-end liquidity might be closer to $18 billion. Liquidity could increase further if United sells more stock under its ongoing at-the-market equity offering. Thus, there's no real risk that United would run out of cash. Furthermore, in the recent investor update, management said that it expects demand to recover meaningfully by next summer, thanks to the global rollout of COVID-19 vaccines.https://www.fool.com/investing/2020/...s-q4-forecast/
Last edited by WineCountryUA; Dec 15, 2020 at 7:52 pm Reason: Moved to existing / ongoing discussion
Dec 15, 2020, 7:46 pm
#1068
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Poor planning from UA to some extent. One didn't need to be a super genius to see some of this coming. Have been looking at their ridiculous new BOS-Florida flights a few days ago and they were all PZ9 with I/IN wide open. Definitely not selling; a r/t was selling for $41 ... not kidding. So I am not sure how much sympathy I have for an airline that has started a ton of speculative new routes in the middle of a pandemic and now realizes that things are not selling.
Dec 15, 2020, 9:17 pm
#1070
Join Date: May 2013
Posts: 3,361
Poor planning from UA to some extent. One didn't need to be a super genius to see some of this coming. Have been looking at their ridiculous new BOS-Florida flights a few days ago and they were all PZ9 with I/IN wide open. Definitely not selling; a r/t was selling for $41 ... not kidding. So I am not sure how much sympathy I have for an airline that has started a ton of speculative new routes in the middle of a pandemic and now realizes that things are not selling.
Dec 16, 2020, 5:08 am
#1071
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I would tend to disagree and what data did UA have to start a ton of new routes with zero historical experience? In the midst of a pandemic?
Dec 16, 2020, 11:53 am
#1073
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Poor planning from UA to some extent. One didn't need to be a super genius to see some of this coming. Have been looking at their ridiculous new BOS-Florida flights a few days ago and they were all PZ9 with I/IN wide open. Definitely not selling; a r/t was selling for $41 ... not kidding. So I am not sure how much sympathy I have for an airline that has started a ton of speculative new routes in the middle of a pandemic and now realizes that things are not selling.
The load is pretty good on a random day I pulled up (Dec 28). Most of the days have fares higher than $41 roundtrip.
PZ9 since most are leisure travelers.
Dec 16, 2020, 7:33 pm
#1074
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Poor planning from UA to some extent. One didn't need to be a super genius to see some of this coming. Have been looking at their ridiculous new BOS-Florida flights a few days ago and they were all PZ9 with I/IN wide open. Definitely not selling; a r/t was selling for $41 ... not kidding. So I am not sure how much sympathy I have for an airline that has started a ton of speculative new routes in the middle of a pandemic and now realizes that things are not selling.
Yes, are people still flying to Florida for the winter? Sure, even Canadians are crashing across the border and running for Florida, Arizona, Palm Springs, etc - but we're talking numbers down 80% vs 2018-2019, and even US based travelers who would be making these trips are now opting to stay home or travel local. It's not really rocket science to know that you cannot make a forecast in this industry until there is a vaccine or treatment, and widely accepted standards that can determine who can or should be traveling to various destinations - only when that is clear do you dust off your expansion plans and get moving. Since the travel industry has never, ever faced this kind of scenario before, it's not really the right time to be swinging for the fences and taking a chance, data or not.
Last edited by WineCountryUA; Dec 16, 2020 at 8:40 pm Reason: Removed inappropriate characterization per FT Rule12.2
Dec 16, 2020, 8:50 pm
#1075
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Completely agree - this is really common sense 101. Literally everyone with scientific knowledge was warning about a second surge, yet United among other airlines and various businesses assumed this was all wrapped up and done last May-June and happy days are close at hand. Wrong. When the smart money is telling you months ago there is a dark winter coming with a major surge of new cases, you plan for that, not a forecast of sunshine that is nothing more than a hope and dream.
Yes, are people still flying to Florida for the winter? Sure, even Canadians are crashing across the border and running for Florida, Arizona, Palm Springs, etc - but we're talking numbers down 80% vs 2018-2019, and even US based travelers who would be making these trips are now opting to stay home or travel local. It's not really rocket science to know that you cannot make a forecast in this industry until there is a vaccine or treatment, and widely accepted standards that can determine who can or should be traveling to various destinations - only when that is clear do you dust off your expansion plans and get moving. Since the travel industry has never, ever faced this kind of scenario before, it's not really the right time to be swinging for the fences and taking a chance, data or not.
Yes, are people still flying to Florida for the winter? Sure, even Canadians are crashing across the border and running for Florida, Arizona, Palm Springs, etc - but we're talking numbers down 80% vs 2018-2019, and even US based travelers who would be making these trips are now opting to stay home or travel local. It's not really rocket science to know that you cannot make a forecast in this industry until there is a vaccine or treatment, and widely accepted standards that can determine who can or should be traveling to various destinations - only when that is clear do you dust off your expansion plans and get moving. Since the travel industry has never, ever faced this kind of scenario before, it's not really the right time to be swinging for the fences and taking a chance, data or not.
If I am not mistaken, every major US carrier has had new routes this year. Running a business requires fortitude and taking calculated risks. Yes, we are still very much in a pandemic, but should UA (and other airlines) just give up and shutter their operations? New routes may or may not work, before or during COVID, this will be a similar test.
B6 is expected to announced major routes into MIA. The reaction in that thread is much cheerful than here.
Dec 16, 2020, 9:48 pm
#1076
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Vaccine is being rolled out NOW.
If I am not mistaken, every major US carrier has had new routes this year. Running a business requires fortitude and taking calculated risks. Yes, we are still very much in a pandemic, but should UA (and other airlines) just give up and shutter their operations? New routes may or may not work, before or during COVID, this will be a similar test.
B6 is expected to announced major routes into MIA. The reaction in that thread is much cheerful than here.
If I am not mistaken, every major US carrier has had new routes this year. Running a business requires fortitude and taking calculated risks. Yes, we are still very much in a pandemic, but should UA (and other airlines) just give up and shutter their operations? New routes may or may not work, before or during COVID, this will be a similar test.
B6 is expected to announced major routes into MIA. The reaction in that thread is much cheerful than here.
Dec 16, 2020, 10:30 pm
#1077
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The vaccine is months away from widespread distribution to the general public, and probably a numbers of months after that before anyone can tell for sure that the virus is truly subsiding - then there are details to work out on who can travel where internationally, or whether travel will pick up, to what level and to where. There is a dramatic difference between being prudent, conservative and taking a wait-and-see approach before big investments vs "giving up and shuttering their operations". The middle of a global health crisis that has all but grounded travel is not the right time for testing how routes would perform under normal circumstances - and all of this from a company that is burning cash faster than my fireplace burns gas, and is probably ready to come back to the US taxpayer weeping with its hand out for free giveaways of cash to reward irresponsible behavior.
Dec 16, 2020, 10:44 pm
#1078
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Well we all know on FT that you can't equate booking levels by the seat map - however, if United needs to price at $41-71 a seat to put people on these flights, that's not exactly "winning" unless they plan on selling onboard sandwiches for $200 and making the purchase mandatory.
Dec 16, 2020, 10:59 pm
#1079
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Well we all know on FT that you can't equate booking levels by the seat map - however, if United needs to price at $41-71 a seat to put people on these flights, that's not exactly "winning" unless they plan on selling onboard sandwiches for $200 and making the purchase mandatory.
Dec 16, 2020, 11:49 pm
#1080
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