Technicians Update
April 22, 2020
Brothers and Sisters,
I've asked for a report from the Airline Division’s Senior Transportation Analyst, Kyle Schoembs, on the financial situation at United Airlines given the dire outlook communicated by the company recently. The following is what he has concluded;
On April 20th, United Airlines (UAL) filed preliminary first quarter results with the SEC that showed a pre-tax net loss of $2.1 billion. On an adjusted basis, which strips out special onetime charges, UAL reports a loss of $1.0 billion. Total revenue for the quarter was $8.0 billion, a 17% decrease from first quarter 2019.
As of April 16th, UAL had $6.3 billion in cash, cash equivalents, short-term investments and undrawn amounts, including $2 billion under its undrawn revolving credit facility.
Going forward, UAL will receive $5.0 billion in loans and grants from the CARES Act. Of the $5.0 billon, roughly $3.5 billion will be direct grants, and the remaining $1.5 billion will be a ten-year low interest loans, with interest rates of 1.0% in years one through five and 2.0% in years six through ten. Additionally, under the CARES Act, UAL expects to have the ability through September 30, 2020 to borrow another $4.5 billion from the U.S. Treasury Department for a term of up to five years.
In April, UAL has cut approximately 80% of its capacity and currently expects to cut 90% of its capacity for May and June. UAL plans to proactively evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand.
It is expected that UAL will submit a more detailed SEC filing of the first quarter results on April 28th. After we review that information, we will update the membership to the contents of that document.
We will continue to monitor the situation and keep you apprised of changes as they occur.
In Solidarity,
Vincent Graziano
Airline Division Representative
Intl., Brotherhood of Teamsters