United Airlines Holdings Inc. (UAL) - Get Report shares traded lower Thursday after the carrier posted a wider-than-expected third quarter loss that triggered thousands of job cuts millions in severance payments.
United's CEO, Scott Kirby, also told CNBC on Thursday that a broader airline sector recovery isn't likely until there's a effective COIVD-19 vaccine, which may not arrive until the middle of next year.
United pegged its adjusted loss for the three months ending in September at $8.16 per share as revenues fell 78% from the same period last year to just $2.49 billion as flights around the country, and around the world, remain largely grounded amid the coronavirus pandemic.
United's cash burn rate, however, improved from the previous quarter, but still sits at around $25 million per day, narrowing it overall liquidity to around $19.4 billion as of the end of September. With planned furloughs of around 13,000 workers, United's 2020 job cuts have topped 22,000 and cost around $760 million in severance and benefits
"Having successfully executed our initial crisis strategy, we're ready to turn the page on seven months that have been dedicated to developing and implementing extraordinary and often painful measures, like furloughing 13,000 team members, to survive the worst financial crisis in aviation history," said Kirby. "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."
United Airlines shares were marked 4% lower in early trading Thursday to change hands at $34.21 each, a move that would extend the stock's year-to-date decline to just under 62%.
United will hold its regular quarterly earnings call at 10:30 am Eastern time.
"Investors will be quick to compare United's outlook with Delta's, and we remind investors of United's conservative approach with respect to forward guidance, and the fact that United has generally been more pessimistic (or realistic, rather) on the outlook throughout this crisis, and we expect this ethos to be reflected in UAL's Q4 outlook once again," said Credit Suisse analyst Jose Caiado.
"And while we don't expect a particularly rosy tone from management tomorrow regarding the near-term outlook, we note that United also has a track record of delivering on (or exceeding) its commitments, so any guidance shortfall relative to peers must be viewed in that context," he added.
Last month, the airline sector's main international lobbyist said global passenger traffic is likely to be at least two-thirds lower than it was prior to the coronavirus pandemic.
The International Air Transport Association cut is 2020 forecast again Tuesday, and now predicts full-year traffic to be 66% lower than 2019 levels, following what it called 'hugely depressed' traffic levels in August that were impacted by new travel restrictions linked to the resurgence of coronavirus infections in Europe and North America.