United Airlines Expects $2.1 Billion Loss, Seeks More U.S. Aid

United also announced plans to borrow up to $4.5 billion under the Coronavirus Air, Relief and Economic Security (CARES) Act.
Author:
Publish date:

United Airlines  (UAL) - Get Report declined Monday after the company announced it recorded a $2.1 billion pretax loss in the first quarter as the coronavirus pandemic grounded the airline industry.

A year earlier, United posted a profit of $367 million.

United also announced plans to borrow up to $4.5 billion under the Coronavirus Air, Relief and Economic Security (CARES) Act.

The company said total revenue declined 17% year over year in the first quarter to $8 billion, though the results are preliminary and the final results for the first quarter may change. 

As of April 16, United has $6.3 billion in cash and cash equivalents, including $2 billion under its undrawn revolving credit facility. 

United has borrowed an aggregate of $2.75 billion under new secured loan facilities which must be repaid, in a single installment, 12 months from its borrowing date. 

The company's 8-K filing also stated that United took a $50 million impairment charge for its China routes due to the suspension of flights to the country. 

United last week said that it expects to receive $5 billion through the Payroll Support Program under the CARES Act.

Of that total, about $3.5 billion will be a direct grant and approximately $1.5 billion will be a low interest rate loan.

The money will be used to  pay for salaries and benefits for United's tens of thousands of employees. As part of the deal for the loan money, United was required to sell the federal government about 4.6 million shares of United common stock. 

"We thank Congress and the Administration for quickly passing legislation to protect the paychecks of tens of thousands of United Airlines employees and look forward to completing the final agreements with the Treasury Department in the next few days," United said in a statement.