United Airlines reported a US$2.4 billion net loss in Q1 on Monday, a figure that exceeded previously forecast expectations. It is the fifth consecutive quarter in which the airline suffered a loss.
The airline stated that rising fuel costs coupled with ongoing subdued demand for air travel amid the COVID-19 pandemic contributed to the larger-than-anticipated quarterly loss.
Fuel prices reportedly rose 30 per cent in the first quarter when compared with the previous three months, and United is anticipating to see another 5 per cent hike in fuel prices in Q2.
Meanwhile, passenger demand was down 52 per cent in Q1 2021 when compared with Q1 2020, which largely saw pre-pandemic levels of demand until the end of the quarter, when the World Health Organisation declared COVID a global pandemic.
The airline is looking to achieve 45 per cent of its pre-COVID capacity in Q2.
The drop in demand equated to a similar drop in income, with United achieving US$3.22 billion in revenue over the quarter, down 60 per cent compared to Q1 2020, in which it achieved US$8 billion.
The US$2.4 billion adjusted net quarterly loss exceeded analysts’ forecasts of a US$2.23 billion loss, however despite the disappointing results, United said it is eyeing a return to profitability this year, as the vaccination campaign continues globally and air travel demand picks up pace.
United said earlier on Monday that it was also adding three new regular routes to its network: Croatia, Greece and Iceland, which are among the countries welcoming vaccinated tourists.
“These opportunistic steps help position United to return to positive net income even if business and long-haul international demand only returns to about 35 per cent below 2019 levels,” United said.
The company also said it expects core cash flow to remain positive for the rest of 2021 after it achieved “positive core cash flow” in March – which the airline defines as net cash effects after accounting for COVID-19 payroll support and any spending on the recovery efforts or severance for laid-off employees.
United Airlines chief executive Scott Kirby said in a statement: “We’ve shifted our focus to the next milestone on the horizon and now see a clear path to profitability.
“We’re encouraged by the strong evidence of pent-up demand for air travel and our continued ability to nimbly match it, which is why we’re as confident as ever that we’ll hit our goal to exceed 2019 adjusted EBITDA margins in 2023, if not sooner.”