United to Cut Flight Capacity Amid 'Material' Passenger-Traffic Drop

United Airlines withdraws guidance, cuts capacity and raises $2 billion as it grapples with a 'material' drop in passenger traffic due to the coronavirus outbreak.
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United Airlines  (UAL) - Get Report on Tuesday said it was cutting its flight capacity by 10% domestically and 20% internationally in April and withdrawing its first-quarter guidance as it continues to grapple with a “material” drop in passenger traffic due to the coronavirus outbreak.

In a filing with the Securities and Exchange Commission, the airline also said it was anticipating at least a 20% reduction in capacity in May. United said it would cancel flights on a rolling 90-day basis until demand improves.

The company also said it has slashed spending, suspended share buybacks and raised $2 billion in new liquidity, and that CEO Oscar Munoz and President Scott Kirby would forgo 100% of their base salaries in an effort to offset the cascading impact of the steep drop in activity.

United also completely pulled its first-quarter guidance. The guidance, announced with fourth-quarter earnings, was for adjusted per-share earnings of 75 cents to $1.25. United said it now expects a loss in the period.

United late last month rescinded its first-quarter and full-year guidance, though didn't formally yank it off the table outright.

"Due to the heightened uncertainty surrounding this outbreak, its duration, its impact on overall demand for air travel and the possibility the outbreak spreads to other regions, the company is withdrawing all full-year 2020 guidance issued on January 21, 2020," United said in a statement on Feb. 25. 

Prior guidance had forecast full-year earnings in the region of $11 to $13 a share.

Shares of United were up 7% at $50.06 in Tuesday trading. For the year, however, they are down more than 40%.