United Airlines (UAL) today announced second-quarter 2021 financial results. The company now expects positive adjusted pre-tax income¹ in the third and fourth quarters of 2021 as travel demand rebounds.
The company’s second quarter performance largely exceeded original expectations as international long haul and business travel accelerated even faster than anticipated, together with continued yield improvement. Looking ahead, the company expects continued gains as more businesses return by end of summer and into 2022, with a full recovery in demand anticipated by 2023.
“Thanks to the professionalism and perseverance of the United employees who have worked so hard to take care of our customers through the pandemic, our airline has reached a meaningful turning point: we’re expecting to be back to making a profit once again,” said United Airlines CEO Scott Kirby. “As we emerge from the most disruptive crisis our company has faced, we’re now focused squarely on our United Next strategy that will transform our customers’ onboard experience and help fulfill United’s incredible potential.”
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*For purposes of this release, profitability refers to positive adjusted pre-tax income, which is a non-GAAP financial measure calculated as pre-tax income excluding special charges (credits), unrealized gains and losses on investments, net. We are not providing a target for or a reconciliation to pre-tax income, the most directly comparable GAAP measure, because we are unable to predict certain items contained in the GAAP measure without unreasonable efforts. |
Second Quarter Financial Results
- Reported second quarter 2021 capacity down 46% compared to second quarter 2019.
- Reported second quarter 2021 net loss of $0.4 billion, adjusted net loss3 of $1.3 billion.
- Reported second quarter 2021 total operating revenue of $5.5 billion, down 52% compared to second quarter 2019.
- Reported second quarter 2021 Total Revenue per Available Seat Mile (TRASM) of down 11.3% compared to second quarter 2019.
- Reported second quarter 2021 operating expenses down 42%, down 32% excluding special charges (credits)4, compared to second quarter 2019.
- Reported second quarter 2021 pre-tax margin of negative 10.3%, negative 29.2% on an adjusted5 basis.
- Reported second quarter 2021 adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) margin6 of negative 10.7%.
- Raised secured financing collateralized by substantially all of United’s network of slots, routes, and gates — made up of $4 billion in a private offering of bonds, a $5 billion term loan, and a $1.75 billion revolving credit facility. This is a first of its kind financing and the largest non-merger financing transaction in airline history.
- Reported second quarter 2021 ending available liquidity7 of approximately $23 billion.
Outlook
- Expects third quarter 2021 capacity to be down around 26% compared to third quarter 2019, up 39% quarter over quarter.
- Based on current trends, the company expects third quarter 2021 TRASM growth to be positive compared to the third quarter 2019, the first quarter of positive TRASM growth since the second quarter of 2020.
- Expects third quarter 2021 cost per available seat mile, excluding fuel, profit sharing, third-party business expenses, and special charges (CASM-ex)2 to be up approximately 17% compared to third quarter 2019 (includes a 6-point headwind largely driven by lower stage length and lower gauge of our network, including the temporary grounding of 52 Boeing Pratt & Whitney powered 777 widebody aircraft).
- Third quarter 2021 estimated fuel price of approximately $2.17 per gallon.
- Expects third quarter 2021 adjusted pre-tax income1 to be positive, the first quarter of positive adjusted pre-tax income since fourth quarter 2019. Additionally, expects fourth quarter 2021 adjusted pre-tax income1 to be positive.
- Expects 2022 cost per available seat mile, excluding fuel, profit sharing, third-party business expenses, and special charges (CASM-ex)2 to be lower than 2019.
Key Highlights
- Announced the purchase of 270 new Boeing and Airbus aircraft – the largest combined order in the airline’s history and the biggest by an individual carrier in the last decade.
- As part of “United Next” announced plans to retrofit 100% of the mainline, narrow-body fleet to transform the customer experience and create a new signature interior with a roughly 75% increase in premium seats per departure, larger overhead bins, seatback entertainment in every seat and the industry’s fastest available WiFi.
- Established a new diversity goal by striving to have 50% of students at the new United Aviate Academy be women and people of color.
- Launched the first-of-its-kind Eco-Skies Alliance℠ program through which corporate customers contributed to the purchase of approximately 3.4 million gallons of sustainable aviation fuel (SAF) in 2021.
- Entered into a commercial agreement with Denver-based aerospace company Boom Supersonic to add aircraft to United’s global fleet as well as a cooperative sustainability initiative — a move that facilitates a leap forward in returning supersonic speeds to aviation.
- Provided customers the ability to schedule COVID-19 tests and have results reviewed in advance through United’s industry-leading Travel-Ready Center.
- Teamed up with more than a dozen new environmental, nonprofit partners to strengthen the company’s sustainability commitment to become 100% green by reducing its greenhouse gas emissions 100% by 2050.
- Launched a new, corporate venture fund – United Airlines Ventures – which will allow the airline to continue investing in emerging companies that have the potential to influence the future of travel.
- Offered loyalty program members the chance to win free flights for a year’s worth of travel through “Your Shot to Fly” sweepstakes to encourage COVID-19 vaccinations in support of the Biden administration’s national effort to encourage people to get vaccinated.
- Announced a first-of-its-kind collaboration to use Abbott’s BinaxNOW™ COVID-19 Home Test and Abbott’s NAVICA app to help make the international travel experience more seamless.
Taking Care of Our Customers
- Introduced three new promotions that let eligible MileagePlus® Premier® members “Pick Your Path” depending on their upcoming travel plan giving members the chance to fast track their Premier status or earn bonus miles.
- Expanded beer, wine, and snacks to nearly all flights over two hours including new options like White Claw® Hard Seltzer, Breckenridge Brewery Juice Drop Hazy IPA, and Kona Brewing Co. Big Wave Golden Ale.
Reimagining the Route Network
- Announced seven new domestic routes and three new international routes and launched 39 domestic routes and five international routes, with 10 more international routes planned to launch in 2021.
- New route announcements included Dubrovnik, Croatia to Newark/New York; Athens, Greece to Washington, D.C.; and Reykjavik, Iceland to Chicago.
- New route launches included two new long-haul international routes from Accra, Ghana to Washington, DC, and Johannesburg, South Africa to Newark/New York, and three new routes to Hawaii including Maui/Kahului to Newark/New York, Honolulu to Orange County, and Kona to Chicago.
- Resumed nonstop service on 33 domestic routes and 14 international routes compared to the first quarter of 2021.
- Compared to March 2021, United had nonstop service in 55 more domestic and 24 more international routes in June 2021.
- Announced plans to fly roughly 80% of its full schedule in July 2021 compared to July 2019.
Assisting the Communities We Serve
- Announced a program with the Golden State Warriors to launch the Franchise Fund, a program designed to support minority-owned Bay Area small businesses.
- More than 5 million miles donated from United’s customers to charities in need of travel through United’s Miles on a Mission program.
- Over 18,200 pounds of food and beverages ($66,400 value) donated to local food banks.
- Over $326,000 raised for Airlink, World Central Kitchen, Americares, and Global Giving via CrowdRising to support COVID-19 relief efforts in India, including a $40,000 donation by United Airlines.
Additional Noteworthy Accomplishments
- Celebrated the 40th anniversary of the MileagePlus program by giving away 4 million miles to essential healthcare workers.
- Recently redesigned United mobile app was voted the Best Travel App in the 25th annual Webby Awards.
- Joined forces with Chase and Visa to offer eligible United MileagePlus Visa cardmembers the ability to earn five total miles for every dollar donated to select charities supporting the LGBTQ+ community.
- Became the first corporation in at least five years to be presented with the “Volunteer Group of the Year” award from Food Bank of the Rockies. Also, helped Food Bank of the Rockies raise the equivalent of 30,400 meals via a fundraiser.
- In the second quarter of 2021, through a combination of cargo-only flights and passenger flights, United has transported nearly 298 million pounds of freight, which includes nearly 48 million pounds of vital shipments, such as medical kits, PPE, pharmaceuticals, and medical equipment, and more than 765,000 pounds of military mail and packages.
- In the second quarter of 2021, there was an uptick in COVID-19 vaccine shipments, where United shipped 225,000 pounds of vaccines.
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1. Adjusted pre-tax income is a non-GAAP financial measure calculated as pre-tax income excluding special charges (credits), unrealized (gains) losses on investments, net. We are not providing a target for or a reconciliation to pre-tax income, the most directly comparable GAAP measure, because we are unable to predict certain items contained in the GAAP measure without unreasonable efforts. |
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2. CASM-ex (adjusted operating expense per available seat mile) is a non-GAAP measure that excludes fuel, profit sharing, third-party business expense and special charges. We are not providing a target or reconciliation to CASM, the most directly comparable GAAP measure, because we are unable to predict certain items contained in the GAAP measure without unreasonable efforts. |
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3. Excludes special charges (credits), unrealized (gains) losses on investments, net, debt extinguishment and modification fees and special termination benefits. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release. |
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4. Excludes operating special charges (credits). Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release. Second quarter 2019 operating expenses were $9.859 billion, excluding $71 million of special charges. |
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5. Adjusted to exclude special charges (credits), unrealized (gains) losses on investments, net, debt extinguishment and modification fees and special termination benefits. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release. |
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6. Adjusted EBITDA margin is a non-GAAP financial measure calculated as Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), excluding special charges and unrealized (gains) losses on investments, divided by total operating revenue. Reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the tables accompanying this release. |
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7. Includes cash, cash equivalents, short-term investments and undrawn credit facilities. |
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