United Airlines (UAL) Tops Q1 EPS by 90c, Revenues Miss
United Airlines (NASDAQ: UAL) reported Q1 EPS of ($2.57), $0.90 better than the analyst estimate of ($3.47). Revenue for the quarter came in at $7.98 billion versus the consensus estimate of $8.22 billion.
First Quarter Results
- Reported first quarter net loss of $1.7 billion, diluted loss per share of $6.86, and pre-tax loss of $2.1 billion.
- Reported first quarter adjusted net loss of $639 million, adjusted diluted loss per share of $2.57, and adjusted pre-tax loss of $1.0 billion.ยน
COVID-19 Actions
The company took early and aggressive action intended to mitigate the impact of COVID-19 to position the company to bounce back quickly and make United stronger when demand returns.
- First U.S. airline to make aggressive capacity reductions.
- Suspended share repurchase program on Feb. 24, 2020, after spread of COVID-19 to Italy and terminated the program on April 24, 2020.
- First U.S. airline to actively raise additional liquidity to manage the crisis. Since early March, the company raised $4.0 billion of new liquidity in three secured term loan facilities, new aircraft financings and an equity offering (excludes CARES Act Payroll Support Program funding and any Loan Program loans) as of the close of business April 29, 2020.
- The company entered into an agreement with a subsidiary of BOC Aviation Limited for lease financing of six Boeing 787-9 and 16 Boeing 737 MAX 9 aircraft that are currently subject to purchase agreements between United and The Boeing Company and are scheduled to deliver in 2020, including two Boeing 787-9 aircraft that were delivered in April.
- First U.S. airline to announce chief executive officer and president forgoing 100% of respective base salaries.
- First U.S. airline to announce all other officers of the company will take salary reductions, with every officer base salary reduced by 50%.
- Suspended merit salary increases for management and administrative employees and instituted a hiring freeze.
- Offered voluntary unpaid leaves of absence for U.S.-based employees -- with more than 20,000 employees now participating.
- Non-employee directors of the company waived 100% of cash compensation for the second and third quarters of 2020.
- First major U.S. airline to require all flight attendants to wear masks on duty.
- Postponed projects deemed non-critical to operation.
- Slashed spending on vendors and outside contractors.
- Reduced planned full-year adjusted capital expenditures by approximately $2.5 billion, bringing expected full-year adjusted capital expenditures to below $4.5 billion.3
- Plan to only take delivery of aircraft that have financing in place.
"Throughout the COVID-19 crisis we have maintained our focus - first on the safety of our customers and our people and second on swiftly taking action to keep United operating. We have been at the forefront of warning how deep of an impact we expect this crisis could have and how long we expect it could last. We've also led the industry in taking decisive steps to mitigate the operational and financial impacts of COVID-19 -- making deep schedule reductions, drastically reducing spending and aggressively raising liquidity," said Chief Executive Officer, Oscar Munoz. "While we are still in the midst of this crisis, we will not hesitate to make difficult decisions we believe will ensure the long term success of our company. When demand returns, we believe we'll be positioned to bounce back strongly and quickly because of our early and aggressive efforts to fight the worst financial crisis in aviation history."
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