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UA Announces Q2 2020 Financial Results 21 July / Conference Call 22 July

Quote:

United Airlines Took Industry-Leading Steps to Manage Historic Impact of COVID-19 in Q2

CHICAGO, July 21, 2020
-- United Airlines (UAL) today announced second quarter 2020 financial results, the most difficult financial quarter in its 94-year history, with a net loss of $1.6 billion, and an adjusted net loss¹ of $2.6 billion. Total operating revenues were down 87.1% year-over-year, on an 87.8 percent decrease in capacity year-over-year. The company's total liquidity as of the close of business on Monday, July 20, 2020 was approximately $15.2 billion. United now expects liquidity at the end of the third quarter to be over $18 billion.

Cash burn2 during the second quarter averaged $40 million a day, including $3 million of principal payments and severance expenses. The company currently is forecasting average daily cash burn to be approximately $25 million during the third quarter of 2020 including $6 million of principal repayments and severance expenses.

United believes it did the best job of matching actual capacity to demand among its largest network peers. The company also expects to finish the quarter with the lowest average daily cash burn among large network carriers.

"I am grateful for the professionalism and dedication of our United team members who persevered through an historic and challenging period to deliver for our customers," said CEO Scott Kirby. "While this unprecedented crisis has been difficult for our team, we expect United produced fewer losses and lower cash burn in the second quarter than any of our large network 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. 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."

Q2 Financial Actions to Mitigate COVID-19 Impact

The company continued to take aggressive action to mitigate the impact of the COVID-19 pandemic by raising liquidity and reducing cash burn. The company is focused on remaining flexible to position the airline to bounce back when demand recovers.

Since the start of the crisis the company has raised a total of $16.1 billion through debt offerings, stock issuances and the CARES Act Payroll Support Program grant and loan, among other items.
As of July 2, raised $6.8 billion in financings secured against MileagePlus Holdings in the form of a $3.8 billion bond and a $3.0 billion term loan, with interest rates of 6.5% and LIBOR plus 5.25%, respectively.
Entered into an equity distribution agreement for the issuance and sale from time to time of up to 28 million shares of UAL common stock in "at-the-market" offerings. Utilized the at-the-market program to raise $22 million through the sale of approximately 532,000 shares in the second quarter.
The company entered into an agreement with a subsidiary of BOC Aviation Limited to finance through a sale leaseback transaction six Boeing 787-9 and 16 Boeing 737 MAX 9 aircraft that are currently subject to purchase agreements between United and The Boeing Company and are scheduled to deliver in 2020.
Raised $250 million in a secured term loan facility.
Increased cargo revenue by 36.3% by serving strategic international cargo-only missions and optimizing aircraft capacity with low passenger demand.
Reduced total operating costs by 69% versus the second quarter of 2019; excluding special charges3, reduced operating costs by 54%.
Full-year 2020 adjusted capital expenditures4 are now expected to be approximately $3.7 billion.
In third quarter 2020 the company expects consolidated system capacity to be down 65% versus third quarter 2019. The company will continue to proactively evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand, and expects demand to remain suppressed until the availability of a widely accepted treatment and/or vaccine for COVID-19.
Offered employees comprehensive voluntary separation packages including flight benefits and continuous pay through Nov. 30, 2020 with more than 6,000 employees opting to participate.

United CleanPlus: Keeping Our Customers and Employees Safe

Launched United CleanPlus, to reinforce the company's commitment to putting health and safety at the forefront of the entire customer experience, with the goal of delivering an industry-leading standard of cleanliness by partnering with Clorox and experts from the Cleveland Clinic.
Require all United flight attendants and passengers to wear face coverings.
Among first U.S. airlines to enforce policy that bans customers for refusing to follow mask requirements.
This week, the company announced it will now maximize air flow volume for all mainline aircraft high-efficiency particulate air (HEPA) filtration systems during the entire boarding and deplaning process, helping further reduce the spread of COVID-19.
First major U.S. airline to ask all passengers to complete a health self-assessment during their check-in process based on recommendations from the Cleveland Clinic.
As of July 1, all U.S. airports are electrostatic spraying aircraft interiors.
Expanded touchless check-in capabilities to kiosks at more than 215 airports.
The company offers free COVID-19 testing to all employees, and checks their temperatures before they begin work at all U.S. airports.
In May, started providing individually wrapped hand wipes and snack bag with pretzels, Stroopwafel, water, and a hand sanitizer wipe as customers board to reduce touchpoints.

More Space and Flexibility to Build Our Customers' Confidence

First airline to contact customers when flights are more than 70% full to give them the opportunity to change their plans for free.
Upgauged more than 4,000 flights in May and June to give customers more space on-board. Seat factor5 in May was 38.0% and in June was 57.8%.
United doubled the size of its schedule from June to July - meaning more flights, more seats, and more space onboard for our customers. Our schedule will expand again in August.
Expecting a July load factor of 45%, with less than 15% of flights with more than 70% of seats filled.
Waiving change fees for tickets bought through July 31, 2020.

Doing Our Part to Help Fight COVID-19 Since Crisis Began

Booked over 2,900 in-kind flights for medical professionals to support COVID-19 response in New Jersey/New York and California.
More than 19.2 million miles donated by MileagePlus members and 7.6 million miles matched from United to help organizations providing relief during COVID-19.
Donated more than 500,000 pounds of food from United Polaris lounges, United Clubs and catering kitchens to local food banks and charities.
Over 7,500 face masks were made from upcycled unused ramp uniforms.
More than 800 gallons of hand sanitizer produced by United employees in San Francisco for use by United employees.
Donated 15,000 pillows, 2,800 amenity kits and 5,000 self-care products to charities and homeless shelters.
More than 2.2 million pounds of food and household goods were processed by United employees at the Houston Food Bank.
Flew over 78.6 million pounds of medical equipment and personal protective equipment and 2 million pounds of supplies to support military troops.
Operated over 3,800 cargo-only flights to bring 204,000,000 pounds of cargo to communities in need.
More than 2,300 United employees worldwide have volunteered, with over 30,800 hours served.

Links
Q2 results (8K) PDF
Q2 call presentation -- appears no powerpoint was used, verbal only, same as Q1
Q2 call transcript link (3rd party -- not provided by UA and in the past errors have occurred, check against the UA provided audio)
Q2 webcast recording link requires registration Audio only - UA provided
Q2 - 10-Q Quarterly Report

United Investor Update xx July 2020

Past results
UA Announces Q1 2020 Financial Results 30 April / Conference Call 01 May
United Airlines Reports Second-Quarter 2019 Performance & Earnings Call 17 July 2019

Quote:

United Airlines to Hold Webcast of Second-Quarter 2020 Financial Results
July 07, 2020
CHICAGO, July 7, 2020 /PRNewswire/ -- United Airlines will hold a conference call to discuss second-quarter 2020 financial results on Wednesday, July 22, at 9:30 a.m. CT/10:30 a.m. ET. A live, listen-only webcast of the conference call will be available at ir.united.com. The company will issue its second-quarter earnings release and third-quarter investor update after market close on Tuesday, July 21.

The webcast will be available for replay within 24 hours of the conference call and then archived on the website for three months.

The report - at least compared to Delta, looks positive (if one can find anything positive in this report)

Looks like revenue at $1.47 Billion matches Delta and with an adjusted loss $200 million better than Delta

Quote:

Originally Posted by HNLbasedFlyer (Post 32548828)

PRASM was also quite a bit higher than Delta ;)

P.S. both were horrible and no one should legitimately promote being less bad.

I am thrilled to read about the donation of the food, pillows, amenities and self-care products. This is the type of donations that make an impression on me. My dislike of some of the recent changes (think earning 1K) is offset by actions like these.

Well done United.

So on a relative basis to their pre-COVID position, UA may have ended up coming out the best. Suppose that's not a bad start for Kirby, although I have to think Chapter 11 is still going to be in the offing some time next year.

Quote:

Originally Posted by PsiFighter37 (Post 32548883)

They’ll all end up coming out of CH 11 in the same situation. I agree with you that it is inevitable for all of them barring a vaccine miracle in the next few months.

Quote:

Originally Posted by travelinmanS (Post 32549159)

They’ll all end up coming out of CH 11 in the same situation. I agree with you that it is inevitable for all of them barring a vaccine miracle in the next few months.....

How long do you think the $18B liquidity will buffer that? with a dailly burn rate of $25-30M? and $2-3B in severance expenses.

Quote:

Originally Posted by WineCountryUA (Post 32549173)

How long do you think the $18B liquidity will buffer that? with a monthly burn rate of $25-30M / month? and $2-3B in severance expenses.

They are going to burn $25M a day next quarter - not month.

I'm sure you can go at least 18 months with that much liquidity - but you don't wait until the bank account is zero to file. I think we will see filings starting in Q4/Q1 2021 regardless of liquidity - it is all about restructuring.

Quote:

Originally Posted by HNLbasedFlyer (Post 32549185)

:o
Corrected the typo

Previously announcements were for even lower burn rate in Q4, perhaps were will learn more in the conference call in 12 hours

Quote:

Originally Posted by WineCountryUA (Post 32549173)

How long do you think the $18B liquidity will buffer that? with a dailly burn rate of $25-30M? and $2-3B in severance expenses.

You're misunderstanding what they're saying. Ignore all the burn numbers for last quarter and this quarter. They're telling you where they're going to end -- $18B in cash on Sept 30th.

So the relevant question is how long will $18B last? Remember, UA and Delta have a path to zero operating burn by Q4. UA will do it by acting on the 36,000 WARN notices they sent out, as well as thousands of int'l layoffs where no WARN notice is required.

So there's no new conclusion to draw here. It's the same old story. If we get a vaccine in the next year, zero airlines will fail. If there's no vaccine, all but Southwest will likely fail.

Kirby seems to be a solid operator. He raised an absurd amount of cash, using a variety of creative methods, in a matter of weeks.

Quote:

Originally Posted by Aussienarelle (Post 32548857)

I was plesently surprised to read this as well.

Quote:

Originally Posted by spartacusmcfly (Post 32549389)

Kirby seems to be a solid operator. He raised an absurd amount of cash, using a variety of creative methods, in a matter of weeks.

As much as we hate all of the cuts that Kirby makes while counting beans during the good times, maybe this time it is to our advantage. We all have a lot more to loose than a bowl of whole cashews or a few bottles of champaine if UA were to go belly up. I speak in terms of us directly, in the form of lost miles and ETCs, etc, as well as the economic damage due to nearly 100,000 people being permenently out of work.

Quote:

Originally Posted by travelinmanS (Post 32549159)

They’ll all end up coming out of CH 11 in the same situation. I agree with you that it is inevitable for all of them barring a vaccine miracle in the next few months.

There’s talk the vaccine could be here in Sept/Oct. Already tests done and so far they look positive

Of course, consumer confidence is another matter.

Quote:

Originally Posted by UAL757222 (Post 32549561)

There’s talk the vaccine could be here in Sept/Oct. Already tests done and so far they look positive

No way they will be widely available in mass quantities around the world by then.

United is flying the crap out of its 787s and 777-300ERs right now for cargo service, with incremental pax where possible. This won't last forever, but cargo revenue is up 36% year over year and comprised about 27% of United's operating revenues in the quarter, compared to around 2.5% in Q2 last year. It's pretty remarkable...

By comparison, Delta's cargo revenue actually declined in the quarter (yoy), to about $100m; only around 6% of operating revenue (~1.5% normally). This is one area where United is really excelling.

Also noted that UA is "hesitating" to make decisions to retire fleets until it is absolutely certain they don't need them. Laderman even stated that, although it is "probably likely" the PW-powered 752s will not come back, they haven't closed the book on them and are still available to re-enter service if demand rapidly recovers.

For the rest of the fleet, there is "plenty of time, measured in years" to make decisions on retirements.