United reports preliminary first-quarter pre-tax loss of US$2.1 billion

For the first-quarter of 2020, United Airlines Holdings (UAL) and United Airlines, a wholly-owned subsidiary of UAL, recorded a pre-tax loss of US$2.1 billion, $1.0 billion pre-tax loss on an adjusted basis. Total revenues were US$8.0 billion, a 17% decline year-over-year. The results are preliminary and final results for the first quarter may change.

As of April 16, 2020, the company had US$6.3 billion of cash, cash equivalents, short-term investments and undrawn amounts, including US$2 billion under its undrawn revolving credit facility. As previously disclosed, in March and in early April 2020, United has borrowed an aggregate of US$2.75 billion under new secured term loan facilities each of which must be repaid in a single instalment on the applicable maturity date, which, in each case, is twelve months from the borrowing date.

On April 17, 2020, the company submitted an application to the Loan Program under the CARES Act. Under the Loan Program, the Company expects to have the ability through September 30, 2020 to borrow up to approximately US$4.5 billion from the U.S. Treasury Department for a term of up to five years. Any loans issued under the Loan Program are expected to be senior secured obligations of the company, with collateral to be determined. If the company borrows any amounts under the Loan Program, UAL expects to issue to the U.S. Treasury Department warrants to purchase shares of UAL common stock.

The company has experienced, and continues to experience, a material decline in demand for both international and domestic travel resulting from the spread of coronavirus (COVID-19). The company has cut approximately 80% of its capacity for April 2020 and currently expects to cut 90% of its capacity for May 2020, with similar cuts expected for June 2020. The company plans to proactively evaluate and cancel flights on a rolling 60-day basis until it sees signs of a recovery in demand.

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