US carrier United Airlines has posted its third large quarterly loss of the year, as the coronavirus pandemic took a toll on air travel demand.
United Airlines reported a loss of $2.4 billion, excluding special items, which was slightly lower than the $2.6 billion loss it posted in the second quarter as the coronavirus pandemic continued to impact the aviation industry.
Additionally, its net loss of $1.8 billion was higher than the previous quarter's loss.
Losses and furloughs
The losses were primarily attributed to the dramatic decline in air travel due to measures implemented to address the coronavirus pandemic. The decline in demand for air travel has affected the aviation industry as a whole.
According to the International Air Transport Association (IATA), airlines globally are expected to report a fall in revenues this year amounting to $418 billion.
IATA director general Alexandre de Juniac pointed out that financial aid packages granted by earlier this year by various governments to their respective aviation businesses were designed on the assumption that by this time, a recovery would be well underway.
De Juniac added that it was not the case currently and that the industry was still suffering deep "financial trauma". He argued: "Without a second tranche of financial aid, many airlines will not survive the winter."
United Airlines chief executive officer (CEO) Scott Kirby said: "Even though the negative impact of Covid-19 will persist in the near term, we are now focused on positioning the airline for a strong recovery that will allow United to bring our furloughed employees back to work and emerge as the global leader in aviation."
Earlier this month, the airline announced that it will be cutting 13,000 employees after failing to secure additional federal aid. Kirby that the decision on the layoffs represented "a very sad day for all of us here at United."
However, the airline chief mentioned that they could undo the layoffs and quickly recall employees if a deal is reached in the coming days. Kirby said: "We implore our elected leaders to reach a compromise, get a deal done now, and save jobs."
Preparing for a recovery
According to United, it has lowered the amount of cash it is spending to a daily average of $25 million in the third quarter, which was down from $40 million per day in the second quarter.
This was because 9,000 employees took offers to leave the company voluntarily, and it has formed agreements with several of its unions to lower labor costs and reduce the number of involuntary furloughs.
The company's overall revenue fell by 78%, a slight improvement from the 87% decline in the second quarter.
When adjusted for its 70% reduction in seat capacity, United's revenue collected from passengers only declined by 47%, which it claimed to be the smallest fall of any major US airline.
The airline has also been able to raise $22 billion in cash since March via sale of stock, mortgage of its frequent flier program, federal loans and grants and other borrowing.
By the end of the current quarter, United had $13 billion in cash and the ability to borrow an additional $6 billion. It claims that this would position the airline to survive the current aviation crisis.
