United Airlines Reports Loss of $2.1 Billion in Quarter One

United Airlines Reports Loss of $2.1 Billion in Quarter One

As airlines start to report quarterly earnings, we will begin to get a better idea of the impacts of the coronavirus pandemic.  United Airlines said on Monday that it plans to report a pre-tax loss of $2.1 billion for the first quarter.

The airline announced it intends to take a loan from the government for $4.5 billion.  That money is in addition to the $billion in stimulus money the airline took for payroll expenditures.

The release from United Airlines is not shocking, but it begins to put a number of how airlines will reel from losses.  Coronavirus put many airlines at a hold for much of April and all of May.  That is only expected to continue into May and June, as airlines cut schedules.  United Airlines plans on flying only 10% of their normally scheduled flights during those months.

Possible United Airlines Layoffs

United Airlines CEO Oscar Munoz already warned about the possibility for layoffs after stimulus money runs out.  As a condition of the $5 billion in stimulus money for payroll, airlines cannot layoff or furlough employees until September 2020.  But after the payroll stimulus money guarantee ends, in September, the airline will once again have the option to furlough employees.

Southwest CEO Gary Kelly is seeking to reassure his employees that they don’t want to furlough or layoff employees.  It’s unclear how any airline can continue under that premise if they are not making money.

Bottom Line

The losses are substantial, and it’s only Quarter 1.  It’s hard to predict how the remaining three quarters will be for the airline.  But it’s probably a good prediction that Quarter 2 will be the same, if not worse.