United Deep Dive: Earnings Call Underscores Airlines' Disciplined Survival Plan

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No one knows when the economic depression will end. It's no surprise that many companies lost money in the first quarter and will have worse results during the second quarter. Instead, investors are trying to figure out who is able to recover fastest and win market share in a post-pandemic reopening.

That's why no one cares that United Airlines Holdings, Inc. (NASDAQ: UAL) lost $1.7 billion in the first three months of the year. For the airline industry the metrics that count now are liquidity and cash burn. The slower a company can draw down its reserves while waiting for people to start flying again the more likely its chance of survival.

On Friday, United executives said they planned to bring negative cash flow to within $40 million to $45 million per day early this quarter. If business doesn't pick up in the fall, they will consider involuntary furloughs to reduce outflows to $20 million per day. American Airlines, by comparison, is burning through $70 million per day and won't get to $50 million per day until June. 

Here is a closer look at how United is managing the crisis:

Discretionary Spending: Slashing flight schedules, getting 20,000 workers to take temporary leave without pay, suspending purchasing and services from outside vendors, halting work on new projects – not to mention lower maintenance and fuel costs with fewer airplanes in the air – have helped reduce the amount of money being burned.

All told, United expects to save $5.5 billion in operating expenses this quarter compared to its budget, and reduce capital expenditures by more than 50%, or about $2.5 …

Full story available on Benzinga.com

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