Mechanics' Dispatch

Technicians Update

May 2, 2020

Brothers and Sisters,

I have once again asked the Airline Divisions Senior Transportation Analyst, Kyle Schoembs, to review the first quarter earnings report posted by United Airlines on April 30th, and the first quarter 2020 earnings call which took place on May 1st. The following is what he concluded:



On April 30th, United Airlines (UAL) filed a press release announcing its first quarter financial results. In that press release, UAL showed a net loss of $1.7 billion after taxes, on a 16.8% drop in revenues. On an adjusted basis, which strips out special onetime charges, UAL posted a net loss of $639 million.

As of April 29th, UAL had $9.6 billion in liquid assets, including $2.0 billion under its undrawn revolving credit facility. The company has aggressively sought to raise additional liquidity through new loan facilities, new aircraft financing and a $1.1 billion equity offering. Excluding CARES Act funds, UAL has raised $4.0 billion since early March. Going forward, UAL CFO Gerry Laderman noted in the earning call that the company has $10 billion in collateral that could be used to secure additional liquidity if needed.

UAL will receive $5.0 billion from the U.S. Treasury Department though the Payroll Support Program under the CARES Act. Of the CARES Act funds, $3.5 billion will be grants and the remaining $1.5 billion will be in the form of a 10-year loan. The two major stipulations to CARES Act funding are that UAL is required to use the money to protect the salaries and benefits of employees through September 30, 2020, and UAL will issue warrants to the federal government to purchase 4.6 million shares of UAL common stock.

On April 21st, UAL received its first $2.5 billion in CARES Act funds. The company also expects to have access to an additional $4.5 billion in loans from the CARES Act loan program through September 30, 2020 with additional warrants tied to the amount of money UAL borrows.

The company noted they expect a second quarter average cash burn of $40 to $45 million per day. To get there, UAL has cut capital expenditures in half for 2020, including stopping 200 real estate projects and cutting tech projects. Given the cuts in expenditures, and additional CARES Act funds, UAL projects end the second quarter with a similar level of liquidity as today.

UAL does expect 16 737-MAX this year and 24 next year (assuming ungrounded), eight more 787-9 this year and eight 787-10 next year. Because production already started, it is "financially impractical" to halt or delay these orders. Looking forward, UAL is in discussions with Boeing on the timing post-2021 737MAX deliveries, but does not anticipate taking any of those aircraft until they are needed. Additionally, no decisions have been made regarding the retirement of aircrafts. All stored aircrafts are currently considered to be ‘temporarily parked’, with decisions expected to be made in the future.


We will continue to monitor the situation and keep you apprised of changes as they occur.

In Solidarity,

Vincent Graziano

Airline Division Representative

International Brotherhood of Teamsters