By Tracy Rucinski and Ankit Ajmera
(Reuters) – United Airlines said on Wednesday it cut operating costs by 59% in the third quarter and had nearly $20 billion of liquidity to position it for an eventual recovery from the COVID-19 crisis that has hammered the travel industry.
Airline executives have signaled a slow but steady improvement in leisure demand but do not foresee a recovery to 2019 levels for at least two years, with business and international travel particularly slow to bounce back amid ongoing travel restrictions.
When the rebound finally arrives, airlines want to have a cost structure and network in place.
“We’re ready to turn the page on seven months that have been dedicated to developing and implementing extraordinary and often painful measures, like furloughing 13,000 team members, to survive the worst financial crisis in aviation history,” said United CEO Scott Kirby (NYSE:).
He acknowledged, however, that the “negative impact of COVID-19 will persist in the near term.”
Shares closed down about 1% at $35.61 before the results were released and were down 1.37% in after-hours trading.
Chicago-based United said its daily cash burn slowed to an average $25 million in the quarter ended September from $40 million in the second quarter, and included $4 million per day in severance and debt payments.
Including voluntary departures, United said it has cut its workforce by 22,000 employees, leading to roughly $765 million in pretax costs in the third quarter.
United had $19.4 billion of liquidity at Sept. 30.
Revenue fell 78% to $2.49 billion, slowing from a plunge of about 87% in the previous quarter and helped by a 50% jump in revenue from its cargo business.
The airline will face increasing competition on its home turf next year after low-cost rival Southwest Airlines (NYSE:) said this week it plans to add service at two United hub airports: Chicago O’Hare and Houston’s George Bush Intercontinental.
United said its quarterly adjusted loss was $2.37 billion, or $8.16 per share, compared with adjusted net income of $1 billion, or $4.07 per share, a year earlier.
Rival Delta Air Lines (NYSE:) posted a $5.4 billion quarterly loss on Tuesday, while Southwest and American Airlines (NASDAQ:) are due to report next week.
United management will hold an investor call on Thursday at 10:30 a.m. EDT (1430 GMT).
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