United Airlines promises more cost cuts as cash consumption increases

The US carrier has released its results for the fourth quarter. Over the past year, it has lost US $ 7.1 billion due to the effects of the pandemic.

United Airlines has pledged to step up cost-cutting efforts after its cash disbursements increased in the fourth quarter of last year, due to interest payments on its growing debt and lower costs.

Scott Kirby, chief executive of the US airline, said the Covid-19 pandemic “has changed United Airlines forever” and that the company is planning to make “structural cuts” that will make it “more profitable than ever”.

The company said in two years it would exceed the 15.8% margin on earnings before interest, taxes, depreciation and amortization it recorded in 2019, before the pandemic crushed demand for air travel.

United has cut 22,000 jobs due to the crisis, although it temporarily pulled some of those workers after U.S. lawmakers approved $ 15 billion in additional aid to the ailing industry in December.

Financial results

On a related note, United posted a net loss of $ 1.9 billion in the fourth quarter and $ 7.1 billion for 2020 as a whole.

Fourth-quarter operating profit rose to $ 3.410 billion from $ 2.5 billion in the previous quarter as Americans chose to travel for Thanksgiving and the Christmas holidays despite government warnings .

Revenue is down 69% from the fourth quarter of 2019.

Against this background, United’s projections are striking. The company anticipates that its capacity would be reduced by 51% in the first quarter of 2021 compared to the same period in 2019, and that its revenues would be reduced by 65 to 70%.

“Airlines are doing their best to control costs, but there is a limit,” Cowen analyst Helane Becker said in a note. “The industry needs a revenue recovery.”