United Airlines stock tumbled more than 2% in after-hours trading following the airline missing Wall Street's expectations and registering a $1.4 billion quarterly loss. Still, CEO Scott Kirby promised a "clear path to profitability" in the days ahead with the country beginning to move out from under the COVID-19 pandemic.
Noting that the last year of the coronavirus shutdown has been the "most disruptive crisis" the industry has ever faced, Kirby said in a statement that United is "poised to emerge from this pandemic with a future that is brighter than ever."
Kirby will address airline industry analysts and investors in an earnings call on Tuesday at 10:30 am easternt time and will likely reiterate that he sees "strong evidence of pent-up demand for air travel" in the weeks and months ahead.
United kicked off 2021 with a fifth consecutive quarterly loss of $1.4 billion, though the loss narrowed from $1.7 billion a year ago. On an adjusted basis, the company reported a net loss of $2.4 billion.
Operating revenue for the quarter fell to $3.2 billion, compared to $7.9 billion a year ago, and passenger traffic fell 52% compared to the same period a year ago.
The company ended the quarter with $21 billion in available liquidity following an average daily cash burn of $9 million, an improvement of roughly $10 million per day compared to the previous quarter.
During the three-month period ending March 31, United recorded $417 million in costs related to pay continuation and benefits provided to approximately 4,500 employees who chose to voluntarily separate from the company.
Despite the latest loss, United expects its adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to turn positive later this year even if business and long-haul international demand remains 70% below 2019 levels.
The company says it is ready to capitalize on emerging pent-up demand for travel to countries where vaccinated travelers are welcome. On Monday, the company said it would launch international flights to Greece, Iceland and Croatia, pending government approval.
In the first quarter, United announced 41 new upcoming domestic routes and two new international routes. It also launched six new domestic routes and four new international routes, with 13 more international routes scheduled to launch later this year. Additionally, the airline has resumed nonstop service for 12 additional domestic routes and five international routes.
In May, the company plans to fly roughly 52% of its full schedule compared to the same period two years ago. The company will also expand its global route network later this year with nonstop service between Boston Logan International Airport and London Heathrow Airport.
Looking ahead, the company expects second-quarter flight capacity to reach 45% of 2019 levels and total revenue per available seat mile to be down approximately 20% compared to the same period two years ago.
Quarterly operating expenses excluding special charges are forecast to drop by approximately 32% compared to the same period two years ago, including fuel prices of approximately $1.83 per gallon in the second quarter.
The company's adjusted EBITDA margin is expected to be around 20% in the second quarter. United is aiming to exceed its 2019 adjusted EBITDA margins by 2023.
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Shares of United were down about 2% in after-hours trading following the announcement.